Macro analysis of the global oil markets to distill the evolving risks and opportunities for energy industry stakeholders and wealth managers.
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Crude under pressure early Wed after bearish API report - May 8, 2024
Iran attack fears rattle oil market but may be overdone - April 12, 2024
We were prescient once again, predicting in last Friday’s Viewsletter that whether or not the Gaza situation was on the cusp of a de-escalation, heightened volatility in crude was guaranteed.
Crude’s pullback at the start of this week on renewed hopes of a Gaza ceasefire deal proved to be small and short-lived. The US on Thursday warned that Iran was planning a direct strike on Israel in retaliation for a deadly attack on its Damascus consulate on April 1 and crude was on the boil as we closed this report late-Friday evening in Asia.
Front-month Brent futures had vaulted well above $91 in intraday trading, up more than 2% from Thursday’s settle.
But could the fear that crude appears to be pricing in – a major Iranian strike, an Israeli response, and other knock-on effects, potentially including a wider Middle East military conflict – be overblown? We think so.
Also in this issue:
May 2024: Neutral near-term, moderately bearish H2 May - May 3, 2024
After weighing all the bullish and bearish influences on crude, our latest Bulls & Bears report concludes:
US joins a battlefield of paper tigers with new Iran oil sanctions - April 24, 2024
This is our second Executive Briefing Note in a week. This publication is designed to provide prompt and succinct views on major market developments outside the cycle of our regular weekly report, the Oil Viewsletter.
The US Senate, the upper house of the Congress, late-Tuesday passed a package of bills that includes a “Stop Harboring Iranian Petroleum” or SHIP Act, which expands secondary sanctions against Iranian oil exports by targeting ports, ships and refiners that facilitate the transfer of or process oil from the Islamic Republic. The House had passed the bill last Saturday and President Joe Biden is expected to sign it in the coming hours.
What impact might this Act have on Iran’s 3 million b/d of crude production and 1.3-1.5 million b/d of crude exports? Probably none, in our assessment. Which is why we call it the third paper tiger in the Israel-US-Iran geopolitical battle.
OIL IN 2024: Easing demand to weigh on crude, test OPEC+ unity - Dec. 22, 2023
As oil market participants turn the page into 2024, they are contemplating a picture of a global economic slowdown crimping demand growth, even as robust output growth from the US and a few other producers outside the OPEC/non-OPEC alliance tilt the balance towards oversupply.
Questions are swirling around the survival of OPEC+ and its supply management strategy in the face of new challenges awaiting it in the coming months. As Angola’s decision to quit OPEC this week shows, under the veneer of cohesion in the 22-member group, cracks are likely widening, especially on account of members who have lost substantial production capacity after effecting the deepest cuts ever through the Covid-induced demand destruction.
What else does the crystal ball show for the oil market in 2024? Sweet crude prices averaged 18% lower this year, bringing relief from last year’s 40% annual jump. What might next year look like?
We highlight the key elements to keep an eye on and take a closer look at the characteristics of the three main components of next year’s market: Supply, Demand and the Economy.
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