Disruptions to shipping in the Red Sea and via the Suez Canal are raising the prices of African and U.S. crude grades.
Brent crude sees stronger backwardation.
Analysts expect drawdowns in global stocks this month and next to support oil prices.
The inertia of oil prices during the Red Sea oil crisis has made oil traders complacent.
Fears of an escalation of the Israel-Hamas war have subsided amid talks about a ceasefire.
The rerouting of oil tankers directly increases oil demand—by around 200,000 bpd so far.
According to StanChart, the global oil surplus we are currently witnessing is due to seasonal weakness in the month of January.
StanChart notes that there’s been a January inventory draw in only three years since 2004, with the first month of the year averaging a build of 1.2 million barrels per day.
StanChart has predicted that this surplus is transitory and will flip into a 1.6 mb/d deficit in February.
The bullish case for oil prices was strengthened dramatically this week, with strong U.S. economic data helping to push Brent well past the $80 mark.
Oil prices have gained some upward momentum in the last week, driven by geopolitical tensions and inventory drawdowns.
Analysts continue to debate just how serious the geopolitical risks are and whether spare capacity and new production will be able to counter supply issues.
Seasonal shifts in demand, coupled with anticipated interest rate cuts, look set to push oil prices higher in the near future.
A cold snap in the U.S. and continued attacks on ships in the Red Sea have boosted bullish sentiment in oil markets, although increasing product stocks could counter that narrative.
Oil markets are finally focusing on geopolitical risk, with disruptions in the Red Sea pushing Brent up toward $79 and WTI above $73.
IEA: Russia’s oil revenues dropped in November.
IEA: Russia’s export revenues for crude and oil products fell by 17% month-on-month in November to $15.2 billion.
Russia’s overall oil shipments declined by 200,000 barrels per day (bpd) in November, the agency noted.
Macroeconomic factors continue to weigh on oil prices this week, despite the insistence of OPEC+ members that the group’s production cuts will tighten the oil market.
Oil markets are now fully focused on the upcoming OPEC+ meeting, with reports that the group may deepen cuts being counteracted by an apparent lack of unity amongst OPEC members on the issue.