Weekly Bitumen Report: Continuation of Tension in the Middle East and Rally of Price Increase
By the commencement of the war in the Middle East at the end of last week, the global index of Brent crude oil price increased 4.1% on Monday, 16 October in the initial deals of Asia and reached the high level of 88.15$ per barrel. However, the record of 97.69$ on 28 September has not been broken yet.
Tensions in the Middle East led to a wave of preserving secure properties as the investors who are watching these incidents closely try to evaluate the geopolitical risks of the market before any action. The investigations of the analysts show that by the increase of geopolitical risks, the boost in appeal of gold and safe-haven assets and raise of demand for treasury bonds of the United States were observed.
It is a perfect hedge against international turmoil,” said Peter Cardillo, chief market economist at Spartan Capital Securities, who predicted that the dollar would also benefit.
Now, Iran and Saudi Arabia as the 2 main oil players in the international markets and the most effective countries in terms of political developments are at the center of attention to observe what their actions to the region changes will be.
In the meantime, on October 19, Washington formally lifted oil sanctions against Venezuela for 6 months. This decision helps PDVSA to export crude oil and fuel to the United States. But, it should be noted that the rise of Iran oil export during the last months was mainly in the favor of America and Europe as it compensated production cut of Russia and Saudi Arabia and the global markets did not face challenges.
The leaders of 2 main powers in east of the world, Putin and Xi Jinping from Russia and China, met each other in China to attend Belt and Road Forum along with the representatives of more than 130 countries. António Guterres, Secretary-General of the United Nations, is also in China. It seems the forum was a movement against the G20 forum of India.
During the last week, fuel and bitumen faced several fluctuations, but on Wednesday, 18 October, Singapore’s HSFO CST180 increased 12 USD to reach 503$, and its bitumen price was recorded at 520 USD. This is the first time the bitumen price of Singapore has been exceeding its fuel during the last few months.
Bitumen price in South Korea increased 5$ and settled at 425 USD.
Bahrain bitumen price observed 25$ fall and closed at 415 USD. In Europe, bitumen price is reported in the range of 450-520 USD.
Bitumen price in India will follow its weak uptrend after the small increase of 6 USD in the mid. of October, but it seems that the issues to allocate funds for their projects will continue, and like the last few months, import level will not be strong.
By the increase of crude oil and fuel prices, it is expected that Iran’s vacuum bottom increases, however, competition among the manufacturers have reduced and the exporters are under pressure of implementation of tax against export. At the same time, there are rumors that shipping charges from Jebel Ali to some other destinations will increase shortly.
Generally, there is strong pressure on the market as a result of a surge of fuel and crude oil prices, but any increase of bitumen prices will probably require another factor to happen.
Infinity Galaxy team aims to assist market players to experience secure deals depending on the market situation.
This article was prepared by Razieh Gilani, the export manager of Infinity Galaxy.
