Weekly Lubricant Report: The Heavy Shadow of the Stagflation on the Market

Over the last week, there has been a lot of controversy in the oil market, and this has fueled the market.

One of the events of the last week was the rumor that OPEC+ might want to cut ties with Russia, while OPEC did not react and finally said that it decided to increase its daily quota to control the market, which was not implemented.

On the other hand, there was talk of Biden’s meeting with Saudi Arabian to seek to increase oil production capacity in Saudi Arabia, while the price of Fuel Oil in the United States has reached its highest level, about $5 per gallon in the United States.

Biden’s meeting in Saudi Arabia is aimed at controlling prices, which was opposed by Senate Democrats who did not want US-Saudi relations to expand further. But in the end, Biden decided to travel to Saudi Arabia.

Meanwhile, other events in the oil market, including the turn of Saudi Arabia and the UAE towards Russia in political relations, and the re-launch of a Russian missile strike on Kyiv after a one-month hiatus, pushed up oil prices again.

The above is all the case for oil prices to be in the range of $110 to $125 in June, according to the forecasts announced by Infinity Galaxy in its report last week. Over the last week, oil price fluctuations have occasionally decreased and increased daily between $5 and $6.

These fluctuations had a very worrying effect on the market because market decision makers could not figure out what to do next. At the same time, Singapore raised its bitumen price by about $600 compared to the Singapore fuel, which was almost the highest price in Singapore for the last few months.

The turmoil added to the complexity of the situation, as India cut its fuel price by about $27 and it is unclear what decisions will be made in India for next week. At the same time in Iran, due to the lack of optimism about the future of the JCPOA negotiations, it caused the dollar parity, which had increased globally, to increase further in Iran.

Although the global lockdown has been finished in China, and it seems that with the presence of China in the market, the amount of demand should normally increase, but given the turbulent global conditions, it is not clear that with the presence of China in the market, they predict whether it will mobilize the market or not.

These conditions caused the situation of the recycled base oil market in Iran to be more confused than at other times, meaning that there is not enough risk to increase the price and there are components of the price increase. And these two cases, which are practically contradictory, caused the recycled base oil price to remain stable between about $850 to $870 FOB Bandar Abbas.
This week, the price of caustic soda flake fluctuated around $840 FOB Bandar Abbas, the price of paraffin fluctuated between $1350 and $1450.

Over the last two months, Infinity Galaxy has repeatedly referred to inflationary stagnation in its reports, a situation that occurred almost similar to that of the United States in 2008.It seems there are elements in the world for this to happen again.

This worrying situation has led to the current situation where only Infinity Galaxy offers its customers to make purchases based on their expectations, and to avoid long-term investments in this market due to its risks.

This article was prepared by Mozhdeh Darbandizadeh, the account manager of Infinity Galaxy (www.infinitygalaxy.org).