Fears of a prolonged blockade of the Suez Canal push up oil prices | Financial market news
A salvage company said the giant ship blocking the Suez Canal, one of the busiest oil and fuel canals, could take weeks to free itself.
Oil prices rose sharply on Friday amid growing concerns that it could take weeks to dislodge a giant container ship blocking the Suez Canal, which could restrict supplies of crude and refined products.
Prices, however, were still heading for a third consecutive weekly loss as the demand outlook is affected by further coronavirus lockdowns in Europe.
Brent was up 54 cents, or 0.9%, to $ 62.49 a barrel at 4:32 a.m. GMT, after falling 3.8% on Thursday.
U.S. West Texas Intermediate (WTI) crude rose 65 cents, or 1.1%, to $ 59.21 a barrel, after falling 4.3% a day earlier.
Both benchmarks were on track for a weekly loss of around 3%, after dropping more than 6% last week.
The trapped container ship blocks traffic in the Suez Canal, one of the world’s busiest shipping channels for oil and refined fuels, grains and other trade between Asia and Europe .
Officials stopped all ships entering the canal on Thursday and a salvage company said the ship could take weeks to free itself.
Limited supply vs low demand
“Fears of tight supply grew as the main Suez Canal remained blocked by the giant ship, offsetting concerns about weak demand due to lockdowns in Europe and Asia,” Satoru Yoshida said, commodities analyst at Rakuten Securities.
Of the 39.2 million barrels per day (b / d) of total marine trade in crude in 2020, 1.74 million barrels per day passed through the Suez Canal, according to tanker tracking company Kpler. In addition, 1.54 million bpd of refined petroleum products such as gasoline and diesel fuel flow through the canal, or about 9% of global trade in maritime products, Kpler said.
Expectations that the Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, will likely keep production lower have also supported prices, said Yasushi Osada, a researcher at Nissan Securities.
The producer group is due to meet on April 1 to decide on May supplies, and OPEC + sources told Reuters news agency they expected the producer group to do so. Overall holds at current lower levels as demand prospects have deteriorated due to further lockdowns in Europe. .
Acting a week before the OPEC + meeting, the Abu Dhabi National Oil Company (ADNOC) deepened crude oil supply cuts to Asian customers in June to 10-15% from 5-15% in June. May, said several sources familiar with the matter. Thursday.
Countries in Europe are renewing their restrictions to curb the spread of COVID-19, which will likely reduce the region’s fuel demand. Germany, Europe’s largest economy, saw its biggest increase in coronavirus cases since January.
In parts of western India, authorities have ordered people to return home as new infections peaked in five months.