Growing concerns about a global supply shortage are pushing oil prices back up after three weeks of unusual market volatility.
The reference price of Brent crude oil for the international market ended last week (March 18) at 107.93 USD/barrel, up more than 9% in just the last 2 sessions of the week. That price is far below the peak of $139 hit on March 7, but still about $10 a barrel higher than it was before the Russia-Ukraine conflict. Prices at the beginning of this week continued to increase sharply.
The outbreak of Covid-19 in China, leading to strict nationwide blockade measures in the past few weeks – a factor that has reduced demand for gasoline in the country – has not alleviated concerns about a serious shortage of supply. .
Calculating the impact of sanctions on energy supplies of Russia – the world’s largest exporter of crude oil and petroleum products – has been complicated by the interwoven market of unpredictable factors. such as the peace talks between Russia and Ukraine, the possibility of easing restrictions on Venezuelan and Iranian oil exporters, the blockade policy against the Covid-19 epidemic in China – the largest importer of petroleum. world.
“Oil price volatility goes hand in hand with conflicts involving major oil producers,” said Bill Farren-Price, director of energy consulting firm Enverus. Besides the supply risk, there is also doubt about demand. The next big sign will be Europe’s approach to Russian energy sanctions and Iran nuclear talks, which could flood the market with Iranian oil. If that happens, oil prices will plummet.”
Some analysts believe any loss in Russian output would severely affect already fragile markets, in which global oil supplies have failed to keep up with post-pandemic surge in demand. .
Morgan Stanley on March 17 raised its forecast for Brent oil prices in the third quarter of 2022 by 20 USD/barrel to 120 USD/barrel. Goldman Sachs has raised its forecast to $135 a barrel this year, saying Brent prices could reach $175.
The International Energy Agency (IEA) also said that commercial oil stocks in the developed world have been rapidly declining due to insufficient supply to meet demand. Western countries have also released oil from emergency reserves to cool down, but oil prices are still more than double the historical long-term average.
Tight supply continues to worry the market. The IEA on March 18 called for “urgent measures” to reduce oil use. The IEA made this call after publishing a report that Russia’s crude oil production could fall by up to 3 million bpd in April, or 3% of the world’s total, and warned the world may be in the “biggest oil supply crisis in decades”.
Mizuho Bank also recently said that two factors are pushing up oil prices. Such is the lingering uncertainty between Russia and Ukraine as well as the hope that the effects from the Covid-19 epidemic in China may be less severe than anticipated, as the country is gradually easing restrictions. Shenzhen’s key hub partially reopened on Friday (March 18), with five districts allowed to restart work and resume public transport.
Meanwhile, many other analysts say price gains will be limited until traders can quantify the extent of supply damage from Russia.
Florian Thaler, chief executive officer of OilX, which tracks global oil flows, said that Russia’s oil production has actually increased this March, at least for now,” adding: “Sales of refined products started to decline, but crude oil exports remained strong.”
EU countries and others including China continue to buy oil from Russia, despite the US ban. Thaler said India, which normally imports about 150,000 bpd of Russian crude, could increase that to more than 500,000 bpd in April.
The price of Russian export crude is currently selling at much lower prices than Brent to attract buyers, “and history shows that when fully discounted, crude oil has a potential,” Morgan Stanley analysts said. tendency to find markets”.
An increase in prices caused by a sudden supply shock can drag down oil demand, which in turn causes prices to fall. The Ukraine crisis alone could “significantly depress global economic growth”, the IEA said, and cut its forecast for world crude oil use by about a third by 2022.
OilX expert Thaler said imports and demand from Chinese refineries are trending much lower than in 2021. In contrast, consumption in the US, the world’s largest petroleum market. , remains near historic highs, above 20 million bpd in recent weeks despite record domestic gasoline prices.
T&G International Joint Stock Company
Address: 352 Hue Street, Le Dai Hanh Ward, Hai Ba Trung District, Hanoi
Hotline: 0345786803
Email: hrm@
