Britain Calls on Iran to Release Tanker and Crew
July 23rd, 2019
With all the concerns with Iran and other bullish possibilities in the market the funds has been buying again. Hedge funds purchased oil last week at the fastest rate in almost a year, as escalating tension in the Middle East and hopes for a cut in US interest rate outweighed concern about flagging global growth. Funds were buyers last week of Brent crude (+36 million barrels), NYMEX and ICE West Texas Intermediate crude (+29 million), US gasoline (+6 million), US heating oil (+2 million) and European gasoil (+11 million barrels).
The US has sanctioned Chinese state-run energy company Zhuhai Zhenrong Co Ltd for allegedly violating restriction on Iran’s oil. Analysts at Clear View Energy partners say this company is largely disconnected from the Chinese Financial system and will not be a big drain or concern on the system. But this move is a warning to others that are considering buying Iran’s crude oil.
Britain called on Iran on Monday to release a British-flagged tanker and its crew immediately. It described the seizure of the Stena Impero in the Strait of Hormuz as illegal. Iranian Revolutionary Guards seized the Stena Impero in the Strait of Hormuz on Friday in apparent retaliation for the British capture of an Iranian tanker two weeks earlier. Meanwhile, Britain’s Foreign Minister, Jeremey Hunt, said Britain will seek to put together a European-led maritime protection mission to ensure safe shipping through the Strait of Hormuz. He said under international law, Iran had no right to obstruct the ship’s passage, let along board her. He said it was an act of piracy.
The IEA said it is closely monitoring developments in the Strait of Hormuz and ready to take quick action if needed to keep the global oil markets supplied. It said the right of free energy transit through the strait was critical to the global economy and must be maintained.
Goldman Sachs lowered its year-on-year oil demand forecast for 2019 citing disappointing global economic activity, which was further weighed down by milder weather, fuel power demand destruction and historical downward revisions, suggesting lower oil demand growth in 2018. The bank revised down if 2019 oil demand growth forecast to 1.275 million bpd form 1.45 million bpd at the start of the year. Goldman forecast 2020 oil demand growth at 1.45 million bpd on a gradual acceleration in global economic as well as demand increase from International Maritime Origination’s new fuel rules for ships from the start of 2020.
Philadelphia Energy Solutions filed for its second Chapter 11 bankruptcy in less than two years, a month after a fire and explosion led to the permeant shutdown of the largest oil refinery on the US East Coast.
The news seems very repetitive everyday with Iran tensions being the big one. I guess it is a big deal and all eyes are on any developments. This will continue to be the top story for now that the energy markets will watch.