Weekly Bitumen Report: The Storm of Omicron is Leading the Commodity Markets

During the last week, all of the factors determining bitumen prices significantly affected each other compared to the previous weeks and it resulted in the severe fall of bitumen prices and it can be stated that it was devalued around 15% in the last month. The dynamic variables of this unprecedented fall can be mentioned as:

• The outbreak of a new variant of COVID, called Omicron, was the main reason for this fall. The fear of its spread in the world made the buyers stop their purchase and are waiting for the decision of WHO to find if the available vaccines are capable of restricting more outbreaks of Omicron or not. Till the time of preparing this report, the vague status of this variant fell oil price up to around 69 US dollars. Even, Goldman Sachs has changed its predictions about the increase of oil price till the end of 2021 and they do not expect the oil price to be closed at 95 US dollars by the end of 2021 and lowered their predicted level to 85 US dollars till the end of the year. The new forecasts show that the improvement of the current situation may lead to the increase of oil price up to 125 US dollars till the mid of 2022. Besides, OPEC members are also going to decide on the increase/ not increase of supply of 400,000 b/d in global markets.

• The issues of shipping lines regarding the shortage of vessels, containers, and unstable freight costs are still open and it was hoped to be recovered before mid-December but still, there is no positive signal about it.

• The nuclear negotiations of Iran and 5+1 are getting too complicated and both parties are proposing contradictory issues. On one hand, it is said that the previous negotiations will be continued that is promising, but on the other hand, the bilateral threats have led to the instability of the exchange rate market and the US dollar value increased more than 290,000 Rial.

• Presently, the global demands are considerable, and as in less than one month the year will be over, many of the road constructors need to close their projects faster but the elements affecting the current situation do not let them decide properly.

In such situation, the market cannot be imagined out of the two probable scenarios:

1. Omicron variant that has significantly affected the commodity markets like steel, oil, and etc.: if it is verified that this variant has just more spread and does not raise death cases like Delta variant and the available vaccines can protect the world against it, so the market will be recovered and oil price might even exceed its previous highest level (i.e., 82 US dollars).

2. The new variant of Omicron cannot be controlled with the current available vaccines and new lockdowns will be applied by the beginning of 2022 and even the fear of many other new variants is possible so the market will face a severe shock once again.

In the present time, market news is playing a more crucial role than its trends and trend of the market normally shall be growing at this time of the year but the current situation is acting oppositely. So, in this time, it is suggested to trace the market news than its demands.

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