Geopolitical Risk Helps Boost Bullish Sentiment in Global Oil Markets

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Oil prices are set to post a weekly gain as supply concerns combine with expectations of stronger demand this year, OilPrice.com reports.

As the wider Middle Eastern conflict now has Pakistan and Iran exchanging missile attacks, further boosting geopolitical risk, the cold snap in the US has shut in a significant portion of Bakken output, the first US supply disruption in many months. As well as these supply concerns, improving demand sentiment is also adding to upward pressure on oil prices. The IEA lifted its 2024 demand figure for the third time in a row, to 1.24 million b/d, helping Brent get within arm’s reach of the $80 per barrel mark before falling back slightly toward the $79 mark.

Publishing its first monthly market report for this year, OPEC revealed that it expects global oil demand growth to slow down to 1.85 million b/d, leaving its 2024 demand increase unchanged at 2.25 million b/d.

The US firm Albemarle (NYSE:ALB), the world’s largest lithium producer, announced wide-ranging staff cuts as well as the deferral of several key investment projects, most notably its North Carolina lithium processing plant.

On the back of Shell’s (LON:SHEL) U-turn on fossil fuel investment, the UK-based energy major has approved the development of the Victory gas field in the North Sea, 47 years after its discovery, aiming to produce 150 MMCf per day by 2026.

Approximately 650,000-700,000 b/d of North Dakota’s oil production has been offline due to the cold blast, but state regulatory authorities said most of the output will be resumed within the next 4-7 days once the wind chills subside.

China’s state-owned oil major Sinopec (SHA:600028) said it had discovered 133 billion m3 of tight gas in the southwest Sichuan basin, marking another huge low-permeability gas find in the country’s southwestern regions.

Norway awarded 62 offshore oil and gas exploration licenses in the country’s most recent annual APA auction, with Equinor (NYSE:EQNR) participating in 39 licenses and Aker BP clinching 27 stakes in 27 licenses.

The US Treasury imposed sanctions on a UAE-based shipping company Hennesea Shipping for allegedly violating the $60 per barrel price cap with one of its tankers HS Atlantica, marking the first OFAC sanctioning move of 2024.

The worst performer amongst base metals in 2023, nickel prices are set for further declines soon as three-month LME quotes currently trend around $16,050/mt, driven by the doubling of LME-warranted stocks in Q4, a consequence of continuously increasing supply.

French energy major TotalEnergies (NYSE:TTE) initiated a force majeure process on Arctic LNG 2, Russia’s latest LNG plant in which it owns 10%, saying it will not take any liquefied gas from the Novatek-led project in 2024.

As hundreds of tankers diverted from the Red Sea to the Cape of Good Hope, adding 10-15 days to the voyage, ship bunkering demand has been booming in Mauritius, South Africa, and the Canary Islands with bunker prices jumping 15% on the month.

Paraguay is hoping that the Tapir-1 exploration well, the 54th well spudded in Paraguay after 53 previously unsuccessful attempts to discover hydrocarbons in the country, will finally result in an oil find, replicating Argentina’s success.

Tadawul Group, the operator of Saudi Arabia’s stock exchange, has struck a deal with the Dubai exchange DME to buy 32.6% of DME Holdings and rebrand the exchange as GME, Gulf Mercantile Exchange.

A huge Atlantic storm is set to sweep across northern Europe next week, with wind power generation expected to reach an all-time high of 57,949 MW on Monday, capping TTF natural gas prices at €28-29 per MWh ($10/mmBtu).