Latest news with #ArneLohmannRasmussen
NDTV
a day ago
- Business
- NDTV
Oil Prices Surge Amid Fears of Iran-Israel Escalation
Oil prices risk rocketing further should crude supplies become disrupted from a widening Middle East conflict after Israel struck military and nuclear facilities in Iran, analysts said Friday. Below, AFP examines where the oil market could go next. How big is oil's rise? Crude prices soared more than 13 percent at one point on Friday following the overnight attacks -- reaching the highest levels since January. They later pulled back but were still up by around eight percent around 1300 GMT, with international benchmark Brent North Sea crude at nearly $75 per barrel. The sharp gains -- the main US oil contract WTI was up by a similar amount -- can be explained by a risk premium priced into the market. "This premium has surged around $8 per barrel -- higher than the level seen in April and October 2024, when Iran and Israel exchanged direct strikes for the first time in history," noted Jorge Leon, analyst at Rystad Energy. Fresh price surge? Price gains are being capped by news that there has been no immediate reduction to crude production or supplies, after Israel's strikes appeared to have avoided Iranian oil facilities. This could quickly change, however, after Iran called Israel's action a declaration of war. An escalating conflict, resulting in supply disruptions, would almost certainly see prices rise further according to analysts. Iran is the world's ninth biggest oil-producing country, with output of about 3.3 million barrels per day. It exports just under half the amount and keeps the rest for domestic consumption. "If Iran's oil production/export facilities were to be targeted, Brent crude could plausibly jump to around $80-100 per barrel," wrote analysts at Capital Economics research group. Arne Lohmann Rasmussen, at Global Risk Management, said "for the oil market, the absolute nightmare is a closure of the Strait of Hormuz, a waterway through which one-fifth of global oil output passes. "If Iran blocks this narrow chokepoint, it could affect up to 20 percent of global oil flows." Leon estimated that disruption to the Strait could add as much as $20 to the price of an oil barrel. US Role On Prices? There are concerns that the United States could hit Iran with economic sanctions should it not reach a deal with Washington over the Islamic Republic's nuclear ambitions. Sanctions risk tightening oil supplies and likely contribute to prices rising, according to experts. However, Bjarne Schieldrop, analyst at Swedish bank SEB, said Iranian oil exports could fall by only 0.5-1.0 million barrels per day in the wake of sanctions. This is because "China continues to import Iranian oil", he told AFP. Winners and Losers? Falling Iranian output could see Saudi Arabia and other members of OPEC+ producing more of their own oil, in turn boosting revenues. Since April, the cartel led by Saudi Arabia and Russia has already added significant oil volumes to the market, which weighed on prices prior to Friday's surge. Crude futures had for a while traded around $65, hit also by US President Donald Trump's tariffs blitz, which risks weighing on global economic growth. Should prices remain around $75, producers capable of increasing output will have every incentive to do so. At the same time, more expensive crude will push up inflation, hitting many businesses and consumers.
Barnama
a day ago
- Business
- Barnama
Key Trade Route Strait Of Hormuz Under Market Watch After Israeli Attacks On Iran
LONDON, June 13 (Bernama-Anadolu) -- Global markets are closely monitoring the Strait of Hormuz, a vital corridor for oil and liquefied natural gas (LNG), amid fears that a widening conflict between Israel and Iran could disrupt traffic through the narrow waterway. The Strait of Hormuz, positioned in between the Persian Gulf and the Gulf of Oman, is a narrow but critical sea route that approximately one-third of global oil trade, accounting for 17 million to 20 million barrels of crude oil and condensate passes through daily, according to Anadolu Ajansi. Around 70 per cent of oil volume goes to Asia via this route, with China, Japan, India, South Korea, Singapore, Thailand, Pakistan, and the Philippines among the largest recipients, according to the International Energy Agency. bootstrap slideshow The route is also essential for LNG exports, especially from Qatar and the United Arab Emirates, which account for 20 per cent of global LNG trade. Europe is a key destination for LNG that transits through Hormuz. While Iran has previously threatened to close the strait in response to geopolitical tensions, it has yet to act on such threats. However, the prospect of a broader regional conflict following Israel's airstrikes on Iran has renewed concerns over possible supply disruptions and rising energy prices. The UK Maritime Trade Organisation said on Wednesday that the rising tensions in the region could escalate the military activity in critical waterways and affect maritime transport, while the Baltic and International Maritime Council also warned that any attack could directly impact maritime transport. Some analysts say that Iran has a lot at stake should they close the route, as almost all the country's oil exports and a large portion of China's oil imports comes through the Strait of Hormuz. Anadolu reported Arne Lohmann Rasmussen, chief analyst and head of research at Global Risk Management, said that the closure of the Strait of Hormuz would be an 'absolute nightmare' for the oil market.
Yahoo
09-04-2025
- Business
- Yahoo
Airlines and Shippers Pounce on Oil Plunge to Lock in Prices
(Bloomberg) -- With crude prices plunging below $60 a barrel, consumers who count fuel as their single biggest expense are rushing to lock in supplies. More than 25 million barrels of options contracts on the Brent benchmark traded in structures that protect buyers from price gains this week. The activity reflected consumer hedging that allows airlines, truckers and shipping companies to lock in lower fuel costs, according to people involved in the market. Industrial consumers of oil often use derivatives to manage exposure to their single largest cost. Benchmark Brent crude futures have dropped more than 20% in the past week, with the US and China exchanging demand-sapping tariffs just as OPEC+ prepares to boost supply by more than previously anticipated. That's made locking in crude for 2026 more attractive than at any time in the past three years. 'Quite a few of our clients have been running a low hedge ratio on the consumer side and have used the selloff to get closer to their benchmark hedge ratio,' said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. 'A few have said they have been waiting for this setback.' The upturn in activity led to call option volumes climbing to their highest level since October earlier this week. Back then, direct attacks between Iran and Israel sparked a flurry of consumer activity. For some consumers hedging has been a divisive activity. While it offers protection against surging costs, it can at times be expensive and can lead to large losses on paper. Earlier this year Southwest Airlines Co. said it would end its long-held policy of locking in prices — one that has in the past saved it billions of dollars — citing the cost of buying such contracts. The uptick in consumer hedging also shows up in some of the moves on the oil futures curve. Brent for December 2026 is now trading a dollar higher than the equivalent contract for 2025, a sign that nearer prices are falling faster than later ones. The initial burst of hedging activity occurred earlier this week, before a fresh collapse in prices on Wednesday. Brent futures slid close to 7% below $59 a barrel at their lowest point. 'Clearly consumers are coming in to hedge on the back of sharply lower prices,' said Helge Andre Martinsen, senior oil analyst at DNB Bank ASA. 'If the macro becomes too shaky then some consumers get nervous about demand for their products, which could impact hedging behavior.' More stories like this are available on ©2025 Bloomberg L.P.
