Trending
Oil
Source: Newsmaker.id
Oil prices held steady after posting gains for two consecutive days, with market attention focused on supply disruption risks from Saudi Arabia and Libya. These conditions signal a tightening global oil market amidst intensifying competition for supplies destined for Europe.
West Texas Intermediate (WTI) traded above US$104 per barrel after touching its highest level since May on Tuesday. Meanwhile, Brent closed near US$107 per barrel, reflecting a persistent risk premium in global energy markets.
A key disruption stems from Saudi Arabia’s East-West pipeline, which has remained offline since an attack last week. This line is crucial as it allows Saudi oil exports to bypass the contested Strait of Hormuz.
In Libya, production has also been disrupted following the shutdown of main valves at the Hamada and al-Tahara fields. There is no certainty yet on when the Saudi pipeline will resume operations, although US Energy Secretary Chris Wright indicated the disruption would likely last a matter of days.
As a result of the disruption, Saudi Aramco has reportedly delayed oil shipments to several European customers. This situation has triggered a scramble for alternative supplies, while the diesel market is also tightening due to the Middle East conflict and Ukrainian attacks on Russian refineries.
Oil shipping costs have surged as global shipping flows face disruptions. Vessel traffic through Hormuz remains below pre-war levels, while the cost of shipping US crude to Asia has hit record highs; VLCC rates from the US Gulf to China reached US$44.8 million.
On the macro front, the oil rally and rising energy costs are adding to global inflationary pressures. The Federal Reserve is expected to raise interest rates on Wednesday to curb price increases, while the market also awaits official US inventory data following an API report showing a 7.1-million-barrel rise in crude stocks last week.
Newsmaker Analysis: Oil holding steady at high levels indicates that the market does not yet view supply risks as having truly subsided. WTI prices above US$105 and Brent near US$109 signal that disruptions involving Saudi Arabia, Libya, and the Strait of Hormuz, alongside a tight diesel market, remain key factors. Oil prices could see a correction if the Saudi East-West pipeline resumes operations soon and US stockpiles rise significantly. However, if supply disruptions persist, oil prices have the potential to remain high, thereby intensifying global inflationary pressures. (asd)