2024-01-19T19:14:02+00:00
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/ Traders, analysts and data from the London Stock Exchange Group revealed that the Brent crude market and some oil markets in Europe and Africa are witnessing a shortage, partly due to delayed shipments after some cargo ships avoided traveling through the Red Sea.
The disruption coincided with other factors, including production outages and increased demand in China, to intensify competition for crude supplies that do not need to pass through the Suez Canal, and analysts say the crisis is most evident in European markets.
In a sign of tight supplies, the structure of the Brent crude futures market hit a two-month high on Friday, as tankers moved away from the Red Sea after US and British air strikes on targets in Yemen.
“Brent crude futures are the most affected by the disruptions in the Red Sea and the Suez Canal,” said Victor Katona, senior crude oil market analyst at Kpler, according to Reuters.
“So European refiners are the ones suffering the most in physical markets.”
Crude volumes heading from the Middle East to Europe have fallen. Kpler data shows that the volume of crude heading to Europe from the Middle East has almost halved to about 570,000 barrels per day (bpd) in December from 1.07 million bpd in October.
“The Red Sea issues are causing delays so refiners need to cover their needs from local markets,” said one trader. “The market is in a tight spot because of the loss of Gulf supplies,” added another.
Other developments have led to supply shortages in Europe, including a drop in Libyan supplies due to protests, the first such disruption in months, as well as a drop in Nigerian exports.
Crude supplies from Nigeria have fallen after the country started operating the Dangote refinery, which took over some of the cargoes.
Angolan crude, which also heads to Europe without having to pass through the Suez Canal, is seeing increased demand from China and India due to problems with Iranian and Russian crude, a trader said.
China’s oil trade with Iran has been hit by Tehran halting shipments and demanding higher prices, while India’s imports of Russian crude have fallen due to currency challenges, although India says the drop is due to unattractive prices.