The Federal Reserve of the United States has been steadily raising its interest rate over the past year, however, at its latest meeting on Wednesday 14 June, the Federal Reserve announced that there would be no further interest rate increases. In order to contain inflation, the Federal Reserve has increased its interest rates ten times since March 2022, and while some sources have suggested that the economic climate in the United States has improved, recent news has indicated that the inflation rate has reached 4%. According to Diane Swonk of KPMG, the chief economist in America, the economy has been more prone to inflation, which is attributed to factors such as the rise in geopolitical tensions and climate events.
On the other hand, the economic data indicates that the Euro regions experienced a surge in prices and a decrease in consumer spending between late 2022 and the start of 2023, resulting in the region entering an economic recession. As a result, 20 countries have been affected by the economic crisis. The economic outlook from China is not encouraging, which has had a significant impact on oil prices. However, the fluctuation of the oil price has not allowed it to exceed 76 USD.
In the past week, the price of oil has fluctuated between 71-76 USD. Singapore’s HSFO CST 180 saw a decrease of 22 USD at the start of the week. However, it recovered on Wednesday to remain at 422 USD . Singapore and South Korea bulk bitumen was traded at 470 USD and 400 USD respectively.
The price of bitumen in Bahrain has remained stable at 370 USD. However, upon the commencement of the monsoon season in India, the market experienced a shift in direction. On 15 June, the bitumen price of India decreased by 36 USD , resulting in a significant decrease in prices over the past month, which is a significant decrease from the initial months of the year.
The delay in the export process is attributed to the logistical difficulties between Iran and India. Vessels bound for Western ports of India are arriving at their destination with extended delays, thus exacerbating the situation. However, following the recent decrease in Indian bitumen prices and the decrease in Iranian bitumen prices over the past month, the present situation appears to be a favourable one for Indian traders who anticipate receiving their cargoes before the end of the monsoon season.
The USD has gained some strength against the Iranian Rial in the absence of a definitive outcome of the talks between Iran and the US. However, the decrease in the competition among refineries by up to 40% has been attributed to the decrease in the price of bitumen. This has caused the Iranian bitumen price to reach the lowest level among the Middle East countries producing bitumen, which is highly unusual in light of the historical record of oil prices. Nevertheless, the market is likely to experience a rotation of oil prices with the resolution of the US interest rate situation.
This article was prepared by Shirin Yousefi, the Content specialist and market analyst of Infinity Galaxy