Crude Pressure
Crude oil continues to rise, despite promises to increase supply from
OPEC + and other major producers and control oil prices. Respectively, Crude oil is up about $4 compared to the end of 2021. Price development
for base and lubricant products appears to have risen in early 2022.
In other words, rising oil and commodity prices will increase inflationary pressures on many economies. At the same time, because of the
coronavirus, individuals and businesses are being billed accordingly. Omicron waves have not yet peaked in many areas. The high prevalence of new
variants has surprised the economies of Europe, the Middle East and Africa. As a matter of fact, Crude oil and commodity prices will inevitably rise if crude
oil and commodity prices stay within the uptrend channel,
as well as products containing base oils, lubricants and even
chemicals such as caustic soda.
The impact of the rapid eruption of Omicron on oil demand is still unknown. Manufacturers are suffering from a shortage of additives and other materials. Several factories have shut down. During that time, the consumption of
base oil decreased. Logistics was one of the big topics at the end of 2021. However, as mentioned in last week’s report, the problem of slowing
container traffic seems to be mitigated after the holidays. Apart from
shipping issues, merchants also faced increased shipping costs. Passing costs onto the supply chain was very difficult.
It’s also important to mention that despite the high demand for Paraffin
and slack wax products, there are still supply issues. There also seems to be a previous supply problem. On the other hand, the caustic
soda market is overheating. Last week, Bandar Abbas’s FOB price was
$ 600,650, marking the peak of the market again. In summary,
the market is almost out of stagnation next week. As market players enter, supply and demand will improve.
The Turbulent Market is Surprising Its Players
On 31st Dec. 2021 and when such a volatile market was not expected,
our team correctly predicted the calm before the storm and on 7th Jan. 2022, it was also reported that the whole determining factors of bitumen price are
in line with each other and the only unknown factor can be the effect of COVID-19 in the world. During the last week, vacuum bottom competed
for a between2-28 percentage of the refineries and due to growth of the base price of vacuum bottom up to 10%, the competition led to the surge of rates in the market. Some of the buyers failed to place an order, as they
were expecting no significant change of rates in other markets. At the same time, the progress in nuclear negotiations between Iran and Europe,
dollar devaluated more against Rial and one of US dollar was about 270,000 Rial so it affected surge of bitumen prices in addition to the factor of refineries` competitions.
