Weekly Bitumen Report: Marine Crisis and its Effects on Crude Oil
By the attacks of Houthi of Yemen to the commercial ships in the Red Sea, worries about the rise in crude oil prices have increased. On Friday, 15 December, brent Crude Oil was traded at 75 USD per barrel while it reached over 79 USD on 21 December.
As a result of these attacks, four of the main shipping lines, such as MSC, CMA CGM, MAERSK, and Hapag-Llyod, changed the routes of their vessels that pass through the Red Sea.
Red Sea is one of the most important routes to transport oil, liquid gas, and other commodities in the world. It is stated that around 12-15% of global transportation are done through Suez Canal. Following this matter, many of the shipping lines applied war risk surcharge to their prices since Wednesday, and it is heard that ocean freights of some destinations have increased up to 40%. It is still not clear if such a situation can lead to seeing crude oil at 80 USD or more.
In the meantime, 3 Israeli hostages were killed by the Israel army, and the pressures to exchange the captives and another ceasefire have increased, and regional tension reduced accordingly.
It is heard that Ukraine’s president revealed that the army is willing to attract 500K fresh soldiers to fight with Russia. It is not clear if the war situation or global economy might change by approaching the second year of the Russia- Ukraine war.
During the last week, the situation got more critical in the Middle East, and crude oil prices raised up to around 80 USD, although there is still strong resistance to pass this level.
At the same time, on 20 December, Singapore’s HSFO CST180 increased around 13 USD and reached 443 USD. Singapore’s bulk bitumen also observed a raise of 5 USD and closed at 480 USD. Bulk bitumen of South Korea settled at 390 USD with a surge of 5 USD.
Bitumen price in Bahrain is still stable at 400 USD, and the range of prices in Europe is USD 360-450.
India is expecting the fifth drop on 1 January in January 2024, and it is expected to fall 12-15 USD. It is not clear to what extent the crisis of the Middle East might affect the India market.
During the last week, Iranian refineries were not willing to purchase vacuum bottom, and there was no competition among them, and there is still pressure from buyers’ side to reduce the prices.
New prices of vacuum bottom will be announced by the next 2 days in Iran. Before the emergence of the Middle East crisis, negative changes in the prices were expected, but now it is not clear how the prices come out based on the formula.
In less than a week, 2023 will finish, and it seems that the current crises will have a serious effect in the New Year.
Stay in touch with the Infinity Galaxy team to safely pass the hard time of the current market.
This article was prepared by Razieh Gilani, the export manager of Infinity Galaxy.
