Optimism Pushes Prices Higher
June 25, 2024
There continues to be an optimistic outlook for summer demand for crude oil and refined fuels, which has helped push the current run higher. Also supportive to prices was a report that the state-owned oil company in Ecuador declared a force majeure on deliveries of heavy crude exports after the shutdown of a pipeline and oil wells due to heavy rain. The US is a big user of heavy crude oil, so any prolonged issues there that could impact supply for the US market.
European foreign policy chiefJosep Borrell said that the Middle East was close to seeing the conflict expanding into Lebanon just days after Iran-backed Hezbollah threatened EU member Cyprus. He said, “The risks of this war effecting the south of Lebanon and spilling over is every day bigger.”
Ukraine’s President Volodymyr Zelenskiy said that Ukraine had hit more than 30 Russian oil refineries, terminals, and oil depots. Ukraine has stepped up attacks on Russian oil facilities this year seeking to disrupt oil supplies to the Russian army and cut Russia’s revenues to finance its war against Ukraine. The comments above are supportive to prices but the question remains how much of these ongoing Middle East, Russia and Ukraine conflicts have already been baked into the market. These markets are likely to remain range bound here in the near term.