Adedapo Adesanya
By Adedapo Adesanya
Crude oil pointed south on Tuesday as shaky global demand recovery took away the spotlight from a number of supportive developments such as the seizure of an oil tanker in Indonesia, the closure of one of Libya’s main export ports and even an explosion in Saudi Arabia.
These activities could not help prices as the Brent crude lost 4 cents or 0.07 per cent to sell at $55.84 per barrel, while the United States’ West Texas Intermediate (WTI) chipped off 24 cents or 0.45 per cent to trade at $52.53 per barrel.
Demand uncertainty caused by large COVID-19 numbers in populous economies, vaccine struggles and uncertainty surrounding President Joe Biden stimulus plan were all pressuring prices.
China continues to report rising COVID-19 cases, adding to poor demand prospects in the world’s largest importer.
Indonesia, the world’s fourth-most-populous country, surpassed a million confirmed coronavirus cases on Tuesday.
Also in Britain, the death toll passed 100,000 people as the government battled to speed up vaccination delivery while tackling the variant of the virus.
Also adding to the worry was the news that Democrats in the US are still trying to convince Republican lawmakers of the need for more stimulus, raising questions over when and in what form a package will be approved.
The oil market had responded positively to the new administration’s plan to roll out a $1.9 trillion stimulus but with this uncertainty, it contributed to the market swaying the other way.
These events outweighed support that came from geopolitical tensions after two supertankers, with crew members from Iran and China, were seized in Indonesian for suspected illegal oil transfers.
Not even reports of a blast in the Saudi Arabian capital Riyadh, the world’s second-largest producer, was strong enough to deter the direction of the market on Tuesday.
Providing an insight, analysts noted that crude prices are likely to hold back if the Indonesian vessel seizure gets resolved quickly and if the Saudi Arabia blast proves to be an isolated incident that does not escalate regional tensions, consequently not affecting oil output.
Meanwhile, Libya’s oil production rebounded to around 1.25 million barrels a day after a major pipeline was fixed, while efforts continued to end a strike that could halt exports at three of the country’s ports.
The 32-inch pipeline can carry around 200,000 barrels of oil each day to the nation’s biggest export terminal at Es Sider.
Despite the recovery, members of a paramilitary force known as the Petroleum Facilities Guard are threatening to stop shipments at Es Sider and two other terminals, Hariga and Ras Lanuf, in a dispute over unpaid salaries. Talks are underway between them and government officials to resolve the issue.
