WEEKLY ENERGY RECAP: Oil trading is reflecting regional security concerns

Brent crude and WTI prices rose to $65.20 and $57.43 per barrel respectively as oil traders were distracted from worries over supply to concerns about security in the Middle East region. (AP)
Updated 23 June 2019

WEEKLY ENERGY RECAP: Oil trading is reflecting regional security concerns

  • Up until this week, Brent had been on a downward trajectory
  • As we move into the last week of June, Iranian oil exports remain at historic lows

RIYADH: It has taken a while but the oil market has finally responded to tensions in the Arabian Gulf. Brent crude and WTI prices rose to $65.20 and $57.43 per barrel respectively as oil traders were distracted from worries over supply to concerns about security.
Up until this week, Brent had been on a downward trajectory with the price unable to break out of the low $60’s since the end of May as the market focused on weaker demand projections, in part linked to escalating trade tensions and the fallout from the US-China trade war.
With the market now focused not only on the threat of military escalation in the Strait of Hormuz but also falling US crude oil and gasoline stockpiles, the bulls are once again on the rampage.
As we move into the last week of June, Iranian oil exports remain at historic lows as Tehran is shunned by global refiners. We are also seeing the resumption of stronger buying appetite as Asian refiners try to secure oil cargoes before the end of the month, after having waited so long to do so in the hope that prices would keep falling after persistent oil short-selling surges amid concerns of slowing oil demand.
Part of the downward movement in oil prices last month was attribute to weak refining margins for Naphtha. However, if oil prices continue to rise, this might end the weakest Naphtha refining margins in years.
Naphtha margins have been negative since early 2018 with Asia awash with light distillate amid plentiful supplies.
The ample supplies of light sweet crude which comes mainly from US shale also contributed to this bearishness as Asian refiners can’t absorb as much of this type of oil as the sour medium to heavy grades from the Arabian Gulf.
The light sweet crude grades are a shorthand for oil that has less than 0.5 percent sulfur content. These light sweet crude grades yield more naphtha and gasoline than medium and heavy sour alternatives.


Emirates Skycargo deploys capacity to supply food, medicines in UAE

Updated 16 min 21 sec ago

Emirates Skycargo deploys capacity to supply food, medicines in UAE

  • The UAE imports 90 percent of its food
  • The cargo organization said it transported between mid-January and mid-March more than 225,000 tons of cargo

DUBAI: Emirates Skycargo said on Wednesday that it deploys capacity to supply and replenish food and medicines in the UAE, as rulers role out strategies to sustain the country amid the coronavirus pandemic, Reuters news agency reported.

The national cargo organization said it transported between mid-January and mid-March more than 225,000 tons of cargo in total out of which 55,000 tons were food items including fruits, vegetables, meat and seafood, and more than 13,000 tons were pharmaceutical. 

Since the UAE imports 90 percent of its food, food security is a top priority. The annual food security costs of the country is $3.53 billion annually.

Earlier this week the UAE announced a strategic food security law that ensures adequate and uninterrupted food supplies through wholesalers and retailers across the UAE at all times, Khaleej Times reported. 

The law seeks to regulate the strategic stock of food commodities in the country in the event of crises, emergencies and disasters and offers incentives and facilities to registered providers and merchants.