Oil markets are finally focusing on geopolitical risk, with disruptions in the Red Sea pushing Brent up toward $79 and WTI above $73, OilPrice.com reports.
The continuous barrage of attacks on ships passing through the Bab-el-Mandeb strait has lifted oil prices, with Brent futures jumping back to $78 per barrel. Tankers transiting the Red Sea make up for some 12% of global shipping traffic, therefore a $2 per barrel increase might not fully reflect the ongoing supply disruption with market participants expecting it to wind down quickly. Should the mayhem continue, the upside will get even stronger.
The world’s largest shipping companies MSC, CMA CGM, and Moller-Maersk (CPH:MAERSK-B) have stated they would avoid the Suez Canal as several container ships have been attacked by Houthi militants from Yemen, citing concern for safety.
The European Union formally adopted the 12th package of sanctions against Russia, banning the imports of non-industrial diamonds as well as LPG (albeit with a one-year transition period), however watering down the ban on tanker sales to Russia-linked firms.
The US Commodity Futures Trading Commission (CFTC) has asked for even more data from market participants on executed swap deals, seeking to monitor more closely the potential manipulation of benchmarks, a year after Glencore’s $1 billion fine.
Brazil’s Congress approved a bill sponsored by President Lula da Silva to slap a 1% selective tax on oil and natural gas production, aiming to simplify a convoluted system of taxation, although upstream firms have criticized the increasing tax take.
Venezuela’s state oil firm PDVSA and Spanish oil major Repsol (BME:REP) signed a deal to revive production at their Petroquiriquire joint venture, encompassing three oil fields that currently produce only 20,000 b/d of oil and 40 MCf/day of gas.
Berkshire Hathaway (NYSE:BRK) bought some $590 million of Occidental Petroleum (NYSE:OXY) stock this past week, right after the US shale producer agreed to buy private Permian Basin-focused oil firm CrownRock for $10.8 billion.
The authorities of the Panama Canal will raise the number of daily transits from 22 to 24 starting mid-January, thanks to healthy precipitation across the past weeks lifting water levels along the canal’s many lakes, potentially lowering sky-high freight rates.
US oil major Chevron (NYSE:CVX) stated that California’s refinery margin cap not only jeopardizes downstream investments into the state due to an adversarial business climate but also negatively impacts renewable investments by oil firms.
ADNOC, the national oil company of the United Arab Emirates, agreed to buy a 50% stake in the fertilizer unit of European chemical firm OCI (AMS:OCI) for $3.6 billion, taking its total shareholding in Fertiglobe to 86.2% once the transaction is closed.
Chile’s leading lithium producer SQM (NYSE:SQM) and state-controlled copper company CODELCO have launched a roundtable format with indigenous companies, strengthening rumors that the two firms would start a public-private partnership.
Just as the UK government banned British individuals and entities from trading physical Russian metals, including aluminum, copper, and nickel, confusion took over at the London Metals Exchange where 80% of aluminum stocks are of Russian origin.
Following Shell’s pledge to invest in Nigeria’s upstream, France’s energy major TotalEnergies (NYSE:TTE) committed to investing $6 billion over the coming years, ramping up output at offshore fields as well as improving methane detection and capture.
The Central American country of El Salvador is set to amend its regulatory framework on oil and gas exploration, currently producing no hydrocarbons at all, to allow data and surveying companies to map prospective areas before oil majors step in.