January 29, 2023
New Delhi, India
Crude Oil Scenario
Geopolitical tensions in key oil-producing regions have led to a significant surge in crude oil prices, as the market grapples with fears of potential disruptions in the global oil supply chain. Here’s a breakdown of the factors contributing to this uptick:
Attacks on US Forces in Northern Jordan: In a recent drone attack on US forces in northern Jordan, three members were killed, and several others injured, prompting concerns over the stability of the region. President Joe Biden attributed the attack to Iran-backed groups, emphasising a commitment to holding those responsible accountable.
Houthis’ Red Sea Attack: Further escalating market uncertainties, the Houthis targeted a Transfigura-operated fuel tanker in the Red Sea off Yemen’s coast. This incident adds to the worries about potential disruptions in the supply of crude oil from the Middle East, intensifying the impact on global oil prices.
Anticipated Decline in Russian Exports: Expectations of a decline in oil exports from Russia have also contributed to the market’s apprehensions. Recent drone attacks on Russian oil refineries have resulted in some facilities undergoing repair, potentially affecting the overall oil supply from this key player in the global oil market.
As a result of these combined factors, crude oil futures, including April Brent oil and March WTI oil, witnessed a notable increase in prices. The market remains on edge as geopolitical events continue to shape the dynamics of the oil industry.
While the Red Sea attacks have not directly impacted India’s crude oil flow, freight costs have risen due to rerouting via the Cape of Good Hope, according to HPCL Chairman Pushp Kumar Joshi.
In summary, the interconnected nature of global geopolitical events and specific incidents in key oil-producing regions underscores the vulnerability of the oil market to supply disruptions, prompting heightened concerns among market participants.
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