Mixed feelings for oil traders.. Suez Canal accident may continue to support prices
Mixed feelings for oil traders: Global oil prices have differently closed in this week’s dealings.
The current world oil price is still around $ 60-65 a barrel.
Mixed sentiments
Oil prices continue to fluctuate at the beginning of 2021, as at the beginning of March, they reached their highest levels for more than a year,
but in recent days they returned to decline again.
Brent oil price rose by 0.06%, compared to last week’s closing to record $ 64.57.
Meanwhile, West Texas Intermediate crude is still down 0.73% to reach $ 60.97 a barrel this week.
These figures are below the highest levels recorded in early March when Brent crude exceeded $ 70 a barrel
and West Texas Intermediate crude also exceeded $ 66 a barrel
This week
This week, at its worst, West Texas Intermediate crude fell to $ 57 a barrel, while Brent crude recorded $ 62 a barrel.
Divergence in oil prices has occurred in line with conflicting market reactions, amid mixed market morale this week.
The first feeling is the re-imposition of closures in Europe, as this closure will of course reduce demand in the region.
The third wave of Coronavirus and implementation of new barriers and restrictions on moving will be the main reasons
why oil prices have been fallen by more than 7% during recent days.
Germany, Europe’s largest economy, witnessed the largest increase in Covid-19’s cases since January.
Meanwhile, in the United States of America, the distribution of vaccines tends to be faster than in other countries,
but health experts fear that spring break travel activities will lead to an increase in Covid-19’s infections in the country.
The second feeling is that the US dollar has been strengthened again.
US dollar recorded its new highest level in four months against Euro, as US response to the epidemic continued to outstrip Europe.
The rising price of the dollar makes oil priced in dollars more expensive for holders of other currencies.
On Wednesday tradings, oil prices jumped by 6% during one day
Suez Canal cargo ship
This time, it was caused by an accident on the Suez Canal cargo ship.
The crew who tried to drag the ship described it as a whale on the beach.
Reuters quoted Peter Berdovsky, CEO of Boskalis (one of the rescue teams),
saying: “We can not rule out that these (rescue efforts) may take weeks.
It depends on the evolution of the situation”.
Suez Canal is not a local route, but it is the most crowded channel in the world, as it connects Asia and Europe.
If the ship is not passed from there, it will have to go a long way to take more time and money.
This talk is just about oil and not about other products whose trades rely on Suez Canal as the main route.
There are already over 200 large container ships trapped in the sea channel,
causing longer shipping times and overcome costs of course.
Suez Canal accident and oil
On Friday, a sturdy by the German Insurance company “Allianz”,
showed that the cost of global trading due to a siege of a commercial ship for the Suez Canal was estimated,
between $ 6 billion and $ 10 billion a week.
On Friday. Sea traffic congestion caused by transport vessel Evergreen-operated by Taiwanese shipping company Evergreen-
has been overridden-200 vessels were outside Suez Canal.
Some of them began to adjust their routes, while an attempt to liberate the vessel of more than 400 meters in length and 224,000 tons,
which was suspended on Wednesday in the Suez Canal because of a sandstorm and severe winds was unsuccessful.
This led to cutting off the vital route through which 10% of world trade at least, passes.
Experts point out that freeing this cargo ship could take up to a week, in the best cases.
They also warned of possible structural damage to this vessel.
Europe’s largest insurance company
Analysis by Allianz, Europe’s largest insurance company, revealed that each week of closure represents a decrease of 0.2% to 0.4%, a point in annual growth of trade.
This study said: “The problem, is that the siege imposed on Suez Canal is the last straw of global trade.
Delivery times of suppliers have been extended since the beginning of the year,
and now they are longer in Europe than they were during the top of Covid-19 pandemic”.
Freight rates for tankers carrying Petroleum products have almost been doubled since this accident.
The global supply chain for all types of products has also been disrupted.
For example, IKEA, the world’s largest furniture seller, has about 110 containers stuck in Suez Canal.
European companies are in a similar situation.
White House announced that President Joe Biden’s administration is already analyzing the impact
of this incident on energy markets and it will respond to this situation if necessary.
The assistance of the United States
White House spokeswoman, Jane Basaki said: “We offered the assistance of United States to Egyptian authorities to help in reopening of Suez Canal.
Military sources have indicated that a team of experts from the US Navy will be dispatched on Saturday
if this was requested by Egyptian Government”.
They added that the United States was also willing to offer safety advice for shipowners who decided to avoid Suez Canal,
which could expose them to high-risk piracy areas.
On Friday, oil prices rose more than 4%, after the failure of an attempt to remove the container ship that blocked the Suez Canal.
In Europe, Standard Brent crude rose by $ 2.62 to record $ 64.57 a barrel,
while West Texas Intermediate crude rose by $ 2.41 to close at $ 60.97 a barrel.
Of 39.2 million barrels a day of crude transported by sea in 2020,
1.74 million barrels passed through Suez Canal, according to Kpler company data.