RIYADH: Counterintuitively, the latest attacks on tankers in the Gulf of Oman which ratcheted up regional tensions, did not have the same effect on the oil price, which ended the week lower.
Brent crude and WTI prices deteriorated to $62.01 and $52.51 per barrel respectively. In the past even an isolated tanker hijacking or fire was enough to send the price rocketing — but these days traders appear more fixated on where global trade winds are blowing.
Oil seems to be steady in the $60 per barrel range for Brent even if the Arabian Gulf is now considered as one of the riskiest areas for oil tankers since the Iraq War.
It is worth remembering that the Arabian Gulf is where more than a third of the world’s hydrocarbons are transported — a fact reflected in the rising premiums for tanker insurance in the region.
Yet while insurers seem to have responded to the increased geopolitical risks, oil traders are more sanguine. A slowing global economy, persistent trade war worries and rising shale output have combined to cap price increases.
The latest monthly reports from both OPEC and the IEA also cut their demand forecasts, adding to bearish sentiment.
OPEC, in its report, cited weaker growth in global oil demand amid escalated and ongoing global trade tensions, as a key factor in the downward adjustments to the outlook for global oil demand.
- Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter:@faisalfaeq