2024-04-20 11:25:42
Analysts and traders said there were abundant reserves of certain types crude oil To the greatest extent, the impact of the Middle East conflict on futures prices has been limited.
Futures are outdated For Brent crude 92 dollars a barrel briefly last week, the highest level since last October.
Although this had a negative impact on governments suffering from high inflation and fuel prices, the lack of supply would have had more serious consequences.
However, the conflict in the Middle East – the world’s largest oil-producing region – has had no tangible impact on crude supplies.
There is no problem with the oil supply
“Without real supply and production issues, the market will struggle to surpass the highest peak of the year it hit late last week,” said Tamas Varga of BVM Oil Brokerage.
Some of the highest crude grades are showing signs of falling prices. In the physical North Sea crude market, Fortis crude’s premium over benchmark Brent crude’s last recorded price fell to 35 cents following hitting the highest level this year. to 2.3 dollars last February, according to data from the London Stock Exchange Group.
The price of Brent crude rose on Friday, driven by reports of an Israeli attack on Iran, by more than $3.5 to hit $90.75 before falling slightly at the close to settle at $87.3. These prices remained below the peak reached on Friday, before regaining stability during the day..
Analyst Jorge Leon said Rystad Energy estimates the fair value of Brent crude to be around $83 relative to market data, “indicating a current premium linked to geopolitical concerns.”
“Despite the recent blow, Rystad Energy believes that if there is no major escalation in the Middle East, the geopolitical risk premium will stabilize before gradually decreasing,” he said.
By contrast, Nigeria – Africa’s largest crude exporter – is facing difficulties selling cargoes scheduled to be loaded next May, and some sellers have reduced their offers this week.
Two traders told Reuters that at least 35 of the 49 shipments were still on sale, representing relatively slow sales for this time of the month.
Oil prices are under control
HSBC Bank analysts said that in addition to not affecting supply, having an alliance… OPEC Plus Abundant excess production capacity helps maintain prices Oil Under control”, while noting that “a certain degree of geopolitical risk has already been taken into account”.
Signs of weak prices in the markets were driven by peak refinery maintenance work, increased supply from the United States and the end of supply disruptions at some producers, which led to a change in the upward trend observed last February.
Libyan oil production recovered following being partially halted earlier in the year, and U.S. crude exports to Europe increased in the first four months of the year on an annual basis, data shows from Kpler.
One trade analyst said there is a good abundance of U.S. West Texas Intermediate crude.
Among other indicators of market fragility, the premium of the first-month Brent contract over the six-month contract fell to $3.51 a barrel on Thursday, the lowest level in regarding a month, indicating a decline in the tightening of supply.
However, analysts say that while there is a supply of lighter, less dense crudes containing a low percentage of sulfur, called sweet crudes, which can influence Brent prices, heavier crudes, which contain a high percentage of sulfur , called corrosive crudes. , and are generally produced in the Middle East, less abundant.
Oil trader Adi Emirovich said long-term OPEC Plus supply cuts have led to significant reserves of high-sulfur crude being removed from the market, especially as the group’s producers prefer to sell their lighter crudes, which generate more revenue.
Imerovic added that the imbalance between the supply of sweet and sour crude has increased due to two other developments, namely Mexico’s decision to reduce crude oil exports in the current and coming months, and the UAE exporting more light crude from Murban while diverting heavier crude from Upper Zakum. crude to the new Ruwais refinery.
OPEC Plus’ spare production capacity provides some leeway in the event of a real supply disruption. The International Energy Agency estimates OPEC Plus’ excess capacity at around 6 million barrels per day, or regarding 6% of global demand.
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