By Adedapo Adesanya
Crude oil prices rebounded by more than 4 per cent on Friday on concerns that it could take weeks to dislodge a giant container ship blocking the Suez Canal, possibly squeezing supplies of crude and refined products.
At the market yesterday, the price of the international benchmark, the Brent crude futures, gained $2.56 or 4.13 per cent to trade at $64.51 per barrel, while the US benchmark, the West Texas Intermediate (WTI) crude futures, went up by 4.12 per cent or $2.41 to sell at $60.97 per barrel.
The premise has risen when a ship blocked the tankers passageway in the Suez Canal in Egypt. The pathway is frequently used by tankers transporting crude from the world’s top exporters in the Middle East to customers across Europe and the United States, and also by ships moving cargoes from the North Sea to Asia.
Of the 39.2 million barrels per day of total seaborne trade in crude in 2020, a total of 1.74 million barrels per day went through the Suez Canal. Also, 1.54 million barrels per day of refined oil products such as petroleum and diesel fuel flow through the canal, about 9 per cent of global seaborne product trade and with this further disruption, prices shut up again.
New tensions in the Middle East also provoked prices as Yemen’s Houthi rebels say they have launched drone and ballistic missile attacks on Saudi Arabia, targeting oil facilities owned by the state-run Saudi Aramco company and military sites.
The attack coincides with the sixth anniversary of the kingdom’s military intervention into the neighbouring country.
The Iran-aligned group on Friday said targeted Aramco facilities in Ras Tanura, Rabigh, Yanbu and Jizan.
Saudi Arabia has faced an increasing number of such assaults and this has not slowed since it offered a ceasefire deal to the Houthis on Monday.
A Saudi-led military coalition has been carrying out bombings in Yemen since March 26, 2015, in support of the internationally recognised government that was toppled by the Houthis.
Also, expectations that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) will likely maintain their lower production also supported prices.
The producer group is scheduled to meet on April 1 to decide on May supplies, and analysts expect the producer group to broadly stick to current lower levels, as the outlook for demand has deteriorated due to new lockdowns in Europe.
Countries in Europe are renewing restrictions to curb the spread of COVID-19, which will likely reduce fuel demand from the region.
Germany, Europe’s largest economy, has seen its biggest increase in coronavirus cases since January. Others like France, Poland, Ukraine among others have also recorded surges and more lockdown measures will be instituted.
In parts of western India, authorities ordered people indoors as new infections hit the highest level in five months.
Dipo Olowookere