Before the oil market had time to digest the new forecast from the International Energy Agency, the Houthis announced a new approach to bypassing the Red Sea and Suez Canal for merchant ships. Their leader promised to fire missiles at those who decided to take a safer route. As a result, oil is held at the new level of $85.
Oil
For the first time since November last year, the price of oil rose above $85 per barrel this week. The quotes might not have held up if not for the Houthis. Over the week, the price of Brent North Sea oil rose by more than $3 to $85.4 per barrel. This happened for the first time in more than four months.
The main reason was the adjusted forecast of the International Energy Agency (IEA). On the one hand, the IEA increased consumption growth in 2024 by 100 thousand barrels – to 1.3 million barrels per day. On the other hand, the increase in production reduced it by 300 thousand barrels per day.
The price was also supported by reports of Ukrainian Armed Forces drone attacks on Russian refineries. Costs were expected to continue rising as US refineries began preparing for the season and increased oil purchases. But this did not happen and oil prices almost went down.
Motor fuel supplies are declining, Price Futures Group analyst said Phil Flynn. He added that there are concerns that the US Federal Reserve will not be able to cut interest rates because inflation remains above the central bank’s 2% target.
Against this background, the main support for prices unexpectedly came from the Houthis, because of whom most of the trade flows had already been reoriented from the Red Sea to the route around Africa. Rebel leader Abdul-Malik al-Husi said in a televised message on Friday that the Houthis would expand their missile attacks to target Israeli-linked ships heading across the Indian Ocean to the Cape of Good Hope, bypassing the Red Sea and the Suez Canal.
“Our main battle is to prevent ships associated with the Israeli enemy from passing not only through the Arabian Sea, the Red Sea and the Gulf of Aden, but also through the Indian Ocean towards the Cape of Good Hope,” Abdul-Malik al-Malik said. Husi.
For now, this has proven to be enough to keep oil above $85.
Gas
Meanwhile, there are no changes on the gas market. With significant gas reserves and no fear of supply disruptions, Europe and Asia are quietly getting through the heating season. Therefore, the cost of gas remains at an average level of around $300 per thousand cubic meters.
Over the week, European prices rose from $304 to $310 per thousand cubic meters. They were followed by coal, which rose in price from $110.7 per ton to $115.5.
If the price of oil and gas completely suits Russian exporters, then with coal it is more difficult. Last year, domestic producers were able to capture market share in India by offering deep discounts, especially on thermal coal.
But now it is becoming more difficult for suppliers from Russia to compete with other suppliers who are closer to Asia. Reuters cites Kpler data that thermal coal exports from Russia to India fell to 557 thousand tons in February compared to 1 million in January.
“One representative of a Russian manufacturer, speaking on condition of anonymity, said that rising freight costs had effectively reduced profits to zero, and some cargo heading to India had become unprofitable,” writes Reuters.
2024-03-17 18:09:00
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