Challenges Facing Global Oil Markets
On Monday, the executive director of the International Energy Agency discussed the present issues confronting global oil markets; it emphasized the substantial influence Chinese demand could have in the coming months.
With geopolitical tensions high following Russia’s invasion of Ukraine and ongoing supply concerns looming over oil markets, the price of Brent crude is now hovering around $113 per barrel.
In recent months, Chinese oil demand has fallen as the country enacted a series of harsh lockdowns to contain the spread of COVID-19.
If China resumed its average oil consumption and demand patterns, “we will have a tough summer.” The oil and gas business generated over $1.5 trillion in income during the last five years.
And this year, profits from oil and gas businesses will more than double from 1.5 trillion US dollars to 4 trillion US dollars.
Not only were enterprises profitable, but he also noted Saudi Arabia, Iraq, Iran, Russia, Angola, and Nigeria as examples.
Hungary must work with the EU on the Russian oil embargo
German Economy Minister Robert Habeck has advised Hungary not to obstruct efforts to impose an EU-wide embargo on Russian oil imports in response to the Ukraine conflict. Earlier on Monday, the minister told German radio that he was upset that the EU had not yet reached an agreement on the planned oil embargo; in the works for weeks. Germany would be willing to renounce Hungary’s involvement to expedite the process.
Hungary is the most vociferous critic of the planned Russian oil embargo among the EU’s 27 member nations.
The Commission has proposed that most EU member states phase out Russian oil imports by the end of the year, with Hungary and others allowed more time.
Oil Climbs in A Tight Market
On Monday, oil prices increased in early trade; they received support from US gasoline demand, tight supply, and a little weaker US currency. Shanghai prepared to reopen after a two-month lockdown, raising concerns about a dramatic slowdown in GDP.
Brent crude prices were up 82 cents to $113.37 a barrel at 0126 GMT, while WTI crude futures in the United States were up 69 cents, or 0.6 per cent, to $110.97 a barrel, adding to last week’s moderate gains for both commodities.
Oil prices are sustained as gasoline markets remain tight; meantime, solid demand is ahead of the peak driving season in the United States. Refineries are generally ramping up to meet the unquenchable demand of American drivers at the pump.”
The peak driving season in the United States typically begins on Memorial Day weekend at the end of May; concluding on Labor Day in September.
Analysts added that rising gasoline prices might dampen demand; hence, mobility data from TomTom and Google increased in recent weeks; this indicated more people were on the road in locations like the United States.
Oil Rises
Oil rose on Monday as the US dollar fell, making petroleum cheaper for customers holding other currencies. Concerns about China’s efforts to kill COVID via lockdowns have curbed market gains, even if Shanghai should reopen on June 1. Lockdowns in China, the world’s largest oil importer, have harmed industrial productivity and construction; it forced economic stimulus measures such as a larger-than-expected mortgage rate decrease last Friday.
The European Union’s inability to get a final agreement on prohibiting Russian oil from its invasion of Ukraine, which Moscow refers to as a “special operation,” has also prevented oil prices from rising much.
According to Indian Oil and Gas Minister Hardeep Singh Puri, high oil prices are accelerating inflation and causing living standards to fall in several countries. The recurring energy issues demonstrate that customers “need to get on the green path faster”; they will have to switch to renewable energy sources. Meanwhile, governments must ensure enough hydrocarbon-based fuels to meet the current demand.
