Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
In other words, even if conflict is avoided between Israel and Iran in the near future, the world is becoming a more unstable place where energy shocks look ever more likely – and may be the least of our worries
About 30pc of global oil consumption passes through this strait, with a large portion of the oil exports from Saudi Arabia, Iraq, Iran, the UAE, Kuwait, and Qatar’s LNG passing through it as well. This makes the strait an important choke point in the global oil and gas market,” he said.
“While it is difficult to predict by how much and for how long energy prices would rise, we assume that oil and natural gas prices surge by 40pc in 2024.”
Strait of Hormuz
The Iranian regime may not want to cut its own production, but Tehran has a second potential lever over the oil markets: control over the Strait of Hormuz.
This narrow channel between Iran and Oman carries around 15 million barrels of oil a day, making it critical to the global economy. Iran has already seized an Israeli-linked ship in the sea route.
Garbis Iradian, chief economist at the Institute of International Finance, warned in a recent report that “militarising oil by disrupting shipments through the Strait of Hormuz” would hammer global growth.
Analysts believe the risk instead lies with any further escalation, particularly ongoing direct conflict between Israel and Iran.
Citi’s Layton says this could lead to oil prices trading up to $100 per barrel or even higher.
He adds; “An example of this could be if Israel moved to directly reduce Iran’s domestic uranium enrichment program.”
Nerves are understandable: the pandemic disrupted shipping globally, sending goods prices spiralling, while Russia’s invasion of Ukraine hammered oil and gas supplies, resulting in an energy price shock for much of the world.
The possibility of war across some of the most oil-rich lands in the world raised fears of a renewed cost-of-living crisis, with a former US energy adviser warning of an “escalatory dynamic” in global energy markets.
Oil Falls But J.P. Morgan Says Price Heading for $100 a Barrel Amid Russia Turmoil
Oil steadies on US crude inventories data
Geopolitical tensions boost oil prices on mixed day for global equities
Gas Prices Topping $5 Once Again, Will Rise Higher In Coming Weeks
Gas (NG=F) prices are rising higher than they were during the same period last year. Yahoo Finance's Ines Ferré joins the Live Show to discuss possible drivers of the recent price increases.
Ferré notes that the price hikes are partially seasonal, with demand growing as more drivers hit the road. However, with the price per gallon almost $0.10 higher than a year ago, gasoline's price acceleration may also be sourced to oil (CL=F, BZ=F) rates increasing. This comes against a backdrop of OPEC cuts and Russian refinery interruptions.
Crude is also getting a push from technical indicators, with its 50-day moving average exceeding the 100-day moving average, a chart pattern known as a “golden cross.”
Crude is headed for a third monthly gain as OPEC+ presses on with its curbs and the US tightens sanctions on Russian flows. While China’s shaky demand outlook has been a headwind, Premier Li Qiang said Beijing was stepping up policy support to spur growth. Reflecting the bullish mood, money managers’ net-long positions on Brent have risen to the highest in more than a year.
Goldman Sachs Group Inc. said in a research note that commodities will advance this year as central banks reduce interest rates, helping to support industrial and consumer demand. That cautiously bullish outlook squares with recent comments from other market watchers, including Macquarie Group Ltd. and Carlyle Group LP.
Rising geopolitical premiums as the Israel-Gaza conflict continues were also supportive of prices. Iran-backed Houthi militants on Tuesday said they had mounted six attacks on ships in the Gulf of Aden and the Red Sea over the past 72 hours.
Brent rose 1.5% on Monday while WTI gained 1.6% after Russia's government ordered companies to cut output in the second quarter to meet a 9 million barrels per day (bpd) target to comply with pledges to the OPEC+ consumer group.
Russia, among the top three global oil producers and one of the largest exporters of oil products, is also contending with a spate of recent attacks on its oil refineries by Ukraine and has mounted its own attacks on Ukrainian energy infrastructure.
the world's oil demand is rising, and could peak around 1.2 million barrels a day in 2028, the IEA estimated. That could mean the oil market will see a shortage as soon as 2025, Occidental's CEO Vicki Hollub recently warned.
conflict in the Middle East is also posing a major risk to the world's oil supply. If the Israel-Hamas spreads to Lebanon, that would be a "red line" for Iran, Croft said, one of the largest oil producers in the world.
"So I do think we can't write off Middle East supply disruption risk yet," she added.
OPEC+ is also looking to continue its aggressive production cuts. Members of the oil cartel said they would extend the group's 2.2 million barrel-a-day production cut through June. Saudi Arabia, the oil cartel's de facto leader, will continue its voluntary production cut of a million barrels a day, while Russia will cut production an extra 471,000 barrels a day.
The world's oil supply is about to get way tighter and send crude prices climbing, according to commodities expert Helima Croft.
The global head of commodity strategy at RBC Capital Markets pointed to signs that supply-demand imbalance in oil markets could soon tip in the other direction, as the world's crude production is poised to slow. That could cause Brent crude, the international benchmark, to hit $85 in the second half of 2024, Croft predicted.
Oil supply is looking tighter and prices could climb as US production outlook gets cut in half this year, RBC commodities chief says
Oil Markets Seriously Underpricing Geopolitical Risks
Other than oil demand remaining robust, StanChart contends that oil markets are seriously underpricing geopolitical risks and oil prices are currently discounted by at least $10/ barrel to their fair values.
Global Oil Demand Remains Robust Despite Bearish Sentiment
Editor OilPrice.com
Tue, January 30, 2024 at 10:00 AM EST·4 min read
Last week, crude oil futures settled at their highest levels in more than two months while energy stocks scored their best week since March 2023 thanks to a cornucopia of catalysts including escalating tensions in the Middle East, a Ukraine drone attack on a Russian oil refinery, production glitches in the U.S., inventory drawdowns that were much larger than forecast, stronger than expected Q4 GDP growth in the U.S amid declining inflation and increased prospect of more economic stimulus from China.
Oil Jumps to November Highs After Another Merchant Ship Attack
Futures are on track to climb more than 7% in January, with the increase in geopolitical tension countering demand concerns. After a drone assault that killed American troops in Jordan over the weekend, President Joe Biden said he has made a decision on how to respond, without elaborating. The US added that Iran was responsible for providing the weaponry used in the strike but Tehran has denied involvement in the deadly attack and vowed to retaliate against any US strike on its soil or assets abroad.
Oil headed for its first monthly gain since September as an escalation of attacks on ships in the Red Sea spurred a diversion of tanker traffic and raised fears about a wider conflict in the Middle East.
Oil Set for First Monthly Gain Since September on Red Sea Unrest
There are no signs of respite in Israel’s offensive in Gaza while attacks by Iran-aligned Houthis on commercial vessels in the Red Sea have continued despite retaliatory measures from the United States.
The situation has served to tighten European and African crude markets and on friday pushed the front-month Brent contract's premium to the six-month contract to its widest since November.
Oil prices edged higher on Monday as traders weighed the impact of wars in the Middle East and Ukraine on oil supply against economic headwinds pressuring global oil demand.
Oil creeps up as geopolitics counter demand concerns
Oil prices remain well supported by tensions in the Middle East,” Commerzbank analysts including Carsten Fritsch said in a report. “The oil market is also sufficiently supplied.”
The US has launched multiple attacks on Houthi targets in Yemen, but the group continues to menace shipping off the coast, firing at another vessel. President Joe Biden said US strikes would continue.
Crude has struggled to set a sustained direction so far in 2024 — rising and falling in alternate weeks — with tensions in the Middle East countered by traders dialing back bets that the Federal Reserve will start cutting interest rates soon, buoying the dollar and hampering risk assets. Meanwhile, the International Energy Agency sees the market as well-supplied this year given output gains from the US, Brazil, Canada and Guyana.
Oil steadied near a three-week high on escalating tensions in the Middle East, with the US and the Iranian-backed Houthis trading tit-for-tat strikes that have roiled global shipping.
Most Read from Bloomberg
Oil Holds Near Highest Close This Year on Middle East Turmoil
A move higher in the benchmark diesel price used for most fuel surcharges may prove short-lived, because oil futures markets have resumed their downward slide.
The Department of Energy/Energy Information Administration average weekly retail diesel price rose 3.5 cents a gallon, effective Monday, to $3.863. It was only the fourth increase in the past 17 weeks.
It came after oil markets showed some reaction in the past two weeks of trading to the continued interruption in shipping through the Red Sea and the Suez Canal, a disruption that forces oil to stay on the water longer than it would have otherwise. In classic economics analysis, that would be considered bullish for the price of any commodity, because it effectively works to lock oil into inventories for a longer period of time.
Attacks by Yemen-based Houthi militants against ships in the Red Sea have forced many companies to divert cargoes around Africa, adding to journey times and costs. The United States on Wednesday conducted another round of strikes against Houthi targets in Yemen in retaliation for the attacks on shipping.
The turmoil in the Mideast has kicked up freight and insurance rates appreciably but (has) not yet affected total global oil supply other than delaying shipments toward Europe and other regions," said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.
Oil traders also worried about geopolitical risks in the Middle East. Pakistan conducted strikes inside Iran, targeting Baluchi separatist militants, the country's foreign ministry said, two days after Iranian strikes inside Pakistani territory.
Reuters) - Oil prices settled higher on Thursday after the International Energy Agency (IEA) joined producer group OPEC in forecasting strong growth in global oil demand and as cold winter weather disrupted U.S. crude output while the government reported a big weekly draw in crude inventories.
Oil prices settle higher global demand forecasts, US crude stock draw
As wind and solar expand, we expect resulting lower power costs to help green hydrogen produced in Colombia become economically competitive with current forms of hydrogen production and some fossil fuel sources by the 2030s.
Hydrogen-to-power strategies are key to decarbonisation pathways in Europe and Asia, making these key potential export markets for hydrogen produced in Colombia. We estimate the levelised cost of hydrogen (LCOH) in Colombia could be similar to Chile’s. Potential export volumes from Colombia would be globally competitive, especially into Europe.
Oil and gas exploration has been at the heart of Colombia’s national energy strategy and that of its National Oil Company, Ecopetrol. But as the world decarbonises and Colombia focuses on its own net zero target, the winds of change are blowing. How can the country now become a regional leader in a sustainable approach to energy?
Colombia Could Lead Latin America Through The Energy Transition