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March 1st - Multiple sources from trading institutions said on February 28th that following the US and Israeli attacks on Iran, Iran announced the closure of the Strait of Hormuz, and several tanker owners and traders have suspended the transport of crude oil, fuel, and liquefied natural gas through the strait. According to the German Shipowners Association, the shipping industry is facing an "acute operational crisis." Reuters quoted an executive of a major trading firm as saying, "Our ships will remain anchored for several days." Satellite images show that many ships are stranded near major ports such as Fujairah in the UAE, failing to pass through the Strait of Hormuz. Container carrier CMA CGM stated that after the US and Israeli attacks on Iran, the group has instructed its ships in or heading to the Gulf region to find safe locations.March 1st - The escalating conflict in the Middle East is poised to inflict the most severe shock on the natural gas market since the outbreak of the Russia-Ukraine conflict four years ago, which disrupted global trade. Irans neighbors, such as Qatar, are among the worlds most important suppliers, and the region is a crucial supply route, with 20% of liquefied natural gas (LNG) exports passing through the Strait of Hormuz, a vital chokepoint for global energy. According to ship tracking data, LNG trade through this narrow waterway has almost completely stalled. Traders say Asian buyers (who source about a quarter of their LNG from Qatar, the worlds second-largest exporter) have been contacting suppliers to inquire about alternative sources. Meanwhile, Egypt is attempting to expedite shipments after Israel shut down some gas fields. Tom Marzek-Manser, Director of LNG and Gas for Europe at Wood Mackenzie, stated, "Any naval activity in the Strait of Hormuz will put significant upward pressure on market prices, as will any progress in Qatari LNG production."Iranian Supreme Leaders advisor Larijani: The armed forces have deployed sufficient resources, paving the way for the continuation of the operation.German Geosciences Research Center: A 6.15-magnitude earthquake struck the Fiji Islands region.Airports South Africa: Airspace closure in the UAE affects flights of Emirates and Qatar Airways.

WTI struggles at $87 as recession worries probe OPEC's forecast and supply deficit fears intensify

Daniel Rogers

Sep 14, 2022 11:42

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After reverting from the weekly high, WTI crude oil traders seek clear direction around $87.50 during Wednesday's Asian session. However, the present hesitation in the price of black gold may be attributable to the mixed concerns regarding the demand-supply matrix.

 

The Organization of the Petroleum Exporting Countries (OPEC) indicated in a monthly report that oil consumption will climb by 3,1 million barrels per day (bpd) in 2022 and by 2,7 million barrels per day (bpd) in 2023, which is unchanged from last month. Despite obstacles such as rising prices, the news also highlighted indications that major economies were performing better than projected.

 

The news that the United States intends to replenish its emergency oil reserves, as well as the German and European move to control Russian oil and gas prices, could also be favorable for energy prices. In addition, rumors that the Western oil deal with Iran is a long way off are bolstering fears of a supply bottleneck and should have helped energy bulls.

 

Tuesday's US inflation statistics revived concerns about the Federal Reserve's fast rate hike and exacerbated recession concerns. Also acting as downward drivers for WTI crude oil are expectations of economic slowdown due to China and Russia-related concerns.

 

In spite of this, the US Consumer Price Index (CPI) for August increased by 8.3% year-over-year, surpassing market expectations by 0.1%. However, the monthly data increased to 0.1%, exceeding the -0.1% projected and the 0.0% shown in previous assessments. The core CPI, or CPI excluding food and energy, likewise exceeded the 6.1% consensus and 5.9% prior to printing at 6.3% for the month in question.

 

It should be mentioned that the weekly prints of the American Petroleum Institute's (API) industry inventory report also contributed to the commodity's downfall. The API Weekly Crude Oil Stock climbed to 6,035 million during the week ending September 9, up from 3,645,000 the previous week.

 

In the future, the price of black gold may stay under pressure due to a stronger US dollar and economic troubles. Before today's official weekly inventory data from the U.S. Energy Information Administration, however, the supply crisis concerns could test the bears (EIA). Thursday's US Retail Sales for the month of August and Friday's preliminary reading of the September Michigan Consumer Sentiment Index will also warrant close attention.

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