Weekly Bitumen Report: The Opposite Functions of Price Determination in the Market

After more than 127 days of Russia- Ukraine war, it has been reporting that Russia is exporting its oil to the Europe even more than before the war with an amount of 1.84 million barrels per day. The energy crisis is getting more serious in the world and as it was mentioned in the last week report of Infinity Galaxy, the USA allowed Venezuela to export its oil to the Europe to compensate its debts. It seems that the results of G7 Group exit will not have any significant impact on the current trend.

During last week and when President Biden announced his plans of travelling to the Middle East countries like Saudi Arabia and Israel, France also showed willingness to benefit from Iran crude oil in the European Union.

The quick political changes in the world are in a way that it is not possible to predict its fundamental effects on crude oil prices. As Infinity Galaxy frequently reported, June crude oil prices were fluctuating in the range of 110-125 US dollars and at the time of preparing this report, it was closed at 116 US dollars.

As demands fall traditionally during the monsoon and two consecutive drop of bitumen prices in India up to 67 US dollars in June and another fall of at least 15 US dollars on first of July is expected, it can be stated that the market is in a very worrying situation. Iran bitumen prices also dropped significantly due to the empowerment of US dollar value against Iran Rial.

However, from the last Saturday and by the visit of Josep Borrell to Iran, it was agreed that Iran and the USA continue the negotiations in Qatar indirectly, this action led to the fall of US dollar value against Iran Rial and hence export commodities like bitumen faced an increase of rates. Also, it seemed that some political developments in the region with their fundamental effects on oil price were good motivators to export.

Generally, the market has an inactive trend considering the factors like China’s policy in “Zero COVID” which did not lead to the growth of its economy, reduction in transportation costs and fall of export rate comparing to the same period of the last year. These factors are approving the inflationary stagflation in many of the countries.

Currently, the components are acting opposite. Singapore has fixed its bulk bitumen price in the range of 575-600 US dollars. Bahrain has also a fixed range of prices. Iran bitumen price is also showing an upward tendency due to its current political situation and India fall of bitumen price on 1 July is almost confirmed. In such complicated situation, Infinity Galaxy strongly recommends to manage their sale/ purchase depending on the potential demands and avoid any long term investment.

This article was prepared by Razieh Gilani, the export manager of Infinity Galaxy (www.infinitygalaxy.org).