Despite facing various challenges in Iran, such as heavy rain and storms in Bandar Abbas, the Persian Gulf, and the UAE, as well as slow port operations, the price of bitumen continued to rise.
Traditionally, the relationship between oil prices and the geopolitical situation in the Middle East has been direct. However, this time, the oil market is anticipating fluctuations in tension between Iran and Israel. According to Vandana Hari, a financial market analyst, despite Iran’s recent attacks on Israel, there hasn’t been any further escalation of tensions between the two countries. She predicts that markets will gradually revert to previous price levels before the current tension, largely due to uncertainties in the markets. It’s unclear what will happen next, or it could cautiously be stated that nothing significant has changed thus far.
Nevertheless, even though crude oil continues to be exported from the Middle East and the Strait of Hormuz, a crucial passage for 17% of the world’s energy, remains open amid tensions, it’s unrealistic to assume that the current state of the Middle East mirrors that of last week. The recent tensions between the two countries were substantive, and the future actions in the region remain uncertain.
Meanwhile, the demand-supply ratio for oil is still on the rise. However, recent supply issues have led to a decrease in oil production, while global oil reserves, which typically increase in the first half of the year, have remained static. If OPEC+ fails to boost its supply, oil reserves will dwindle in the latter half of the year, leading to a potential rise in prices once again.
The upcoming potential market risk, alongside the security tensions in the Middle East, lies in the potential imposition of new sanctions against Iran by the United States. Given the recent increase in Iran’s oil production and exports, these sanctions could result in another uptick in oil prices, with Russia emerging as the sole beneficiary of such developments.
Conflicting reports regarding China’s economy are emerging. While some published reports indicate a deeper recession in the country, official data suggests a 3.5% increase in China’s GDP in the first quarter of 2024 compared to the previous year, surpassing earlier predictions.
In the United States, the Federal Reserve has yet to officially announce any changes in interest rates. Overall, it appears that the world is grappling with uncertainty about the future given the current conditions.
As of Wednesday, the price of 180 CST in Singapore stood at 516 USD, while bitumen prices in Singapore and South Korea were traded at 410 and 400 USD, respectively. Bahrain’s bitumen price remains stable at 380 USD. In Europe, bitumen prices ranged from 467 to 510 USD.
On April 15, India witnessed a 7.9 USD increase in bitumen prices. With elections approaching in India, this surge underscores the profound impact of market fundamentals on prices.
Bitumen Prices in Iran
Despite numerous challenges in Iran, including heavy rain and storms in Bandar Abbas, the Persian Gulf, and the UAE, as well as sluggish port operations, the price of bitumen continued to climb. Last week saw a noteworthy increase in competition for vacuum bottoms, averaging 8.5%, after several months. It is anticipated that the base price of Iran’s vacuum bottom will experience a considerable increase on Saturday.
