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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Turning point for crude price if production exceeds demand

By A/S Global Risk Management.



Michael Poulson, Oil Risk Manager at A/S Global Risk Management. Image credit: A/S Global Risk Management


Updated on 06 Aug 2018 08:47 GMT

Looking at production figures from Russia and different OPEC countries the supply of oil has increased faster than expected since OPEC and non-OPEC decided to scale back to 100% compliance to the production cut agreement (compliance had been considerably higher in since commencement of the deal in January 2017).

Production in especially Iran was expected to decrease which allegedly was why Russia and Saudi Arabia chose to increase production. The sanctions on Iran are officially being imposed on November 4, but expectations were that buyers would switch to other alternatives before the sanctions officially are imposed. This seems not to be the case and that is adding more bearishness.

Further bearishness is added from the ongoing trade war between the U.S. and China as the situation looks to escalate. Last Wednesday, U.S. president Trump suggested implementing tariffs of 10% to 20% on $200 billion worth of Chinese imports. Then last Friday China responded by presenting tariffs of 5%, 10%, 20% or 25% on 5207 types of imported U.S. goods worth $60 billion.

Despite the lately rather bearish market Brent prices are not expected to consistently be below $70 among others because the Saudis allegedly wants prices above $70. An indication of this is that Saudi Arabia lowered output in July by 200 kbpd compared to June as prices dropped.



A/S Global Risk Management is a provider of customised hedging solutions for the management of price risk on fuel expenses. The company has offices in Denmark and Singapore. For further details about its risk management products and services, please call +45 88 38 00 00 or email hedging@global-riskmanagement.com.






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Brent slightly up after yesterday's intraday drop to just below $72
A/S Global Risk Management Ltd.

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