India’s reports hint at a decline in demand, possibly leading to a fourth consecutive price decrease by mid-December.
The ongoing conflict between Israel and Hamas, which began on October 7, continues in its most violent phase. President Biden has openly criticized Israel, but the situation in the region remains unchanged. Recently, on December 12, Yemen’s Houthi movement claimed responsibility for attacking a Norwegian-flagged tanker, the STRINDA, in protest against Israel’s bombardment of Qaza.
The European Union conducted a meeting on December 14 to discuss providing economic aid to Ukraine and potentially offering membership. The extent to which these actions will impact the future of the war in Ukraine remains uncertain.
Italy officially announced its withdrawal from China’s Belt & Road Initiative last week. This decision, especially significant as Italy was the only G7 member involved in the project, might raise significant concerns for China regarding the initiative.
The Federal Reserve, for the third consecutive time on December 12, maintained interest rates at their highest level in 22 years. This decision indicates an anticipated decline in interest rates by three steps next year, likely after spring. Consequently, after seven consecutive weeks of decline, crude oil prices dropped by 3% on Tuesday following an increase in November’s U.S. consumer costs. Despite this, it appears unlikely that the Federal Reserve will drive oil prices down at the start of the next year.
The Energy Information Administration’s latest report predicts a $10 decrease in crude oil prices by 2024, both in the short-term and in the long run. However, the recent decision by OPEC indicates that member countries will increase their voluntary production cuts starting from early 2024.
During the COP28 meeting, representatives from 200 countries agreed to initiate reductions in global fossil fuel consumption. The duration for which they will uphold this agreement remains unclear.
Oil Market in the Middle East
On December 13, Singapore’s HSFO CST180 traded at $383, while Singapore’s bulk bitumen price reached $460. South Korea’s bitumen price stood at $380. Bahrain’s bitumen price remains at $400, while European regions are experiencing prices ranging between $380 and $450.
Reports from India suggest weak demand trends, indicating a potential fourth consecutive price drop around mid-December, likely around a $16 decrease.
Iran’s refineries continue to face minimal competition for vacuum bottom products, largely dominating the market. Similar to previous weeks, producers and exporters encounter significant export pressures.
