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π₯ Geopolitics breaks the market
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There are fewer and fewer tankers sailing through the Suez Canal, and the split in the oil market into two regions is becoming deeper. Due to Houthi attacks and exorbitant freight prices, it is much more profitable to buy raw materials from local suppliers.
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Situation in the Red Sea remains volatile and is critical to oil price movements.
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The global oil market is becoming local: one is in the Atlantic Basin and includes the North Sea and the Mediterranean Sea, and the other covers the Persian Gulf, Indian Ocean and East Asia. Communication is only through the expensive route around the Cape of Good Hope.
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Some large refineries in Europe have already stopped buying Iraqi oil from Basra, replacing them with supplies from the North Sea and Guyana. In Asia, a surge in demand for
Murban crude from Abu Dhabi in mid-January has already pushed up spot prices, and flows from Kazakhstan to Asia have fallen sharply.
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U.S. crude oil shipments to Asia fell 37% in three weeks in January, while shipping prices rose more than $2 per barrel, according to Kpler. Supplies of liquefied petroleum and liquefied natural gas fell by 65% and 73%, respectively. Prices for Suezmax tankers from the Middle East to North-West Europe added approximately 50%.
Of course, the conflict will not last forever, and global diversification is still possible, but for some countries, for example, South Korea, this process will be very expensive. However, major players are trying to maintain their market share, for example, Saudi Arabia left Arab Light oil prices for Asia unchanged.
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The increase in oil inventories in the US slightly cooled the mood of buyers; the nearest Brent futures fell below $80 against the backdrop of rather harsh rhetoric from the Fed, but the speculative bullish trend is not cancelled.
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So maybe it's time to dig a reserve oil well somewhere closer?
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Profits to yβall!