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September 18, 2021

Syrian crisis lifting crude oil costs

Brent crude oil dropped below USD 116 a barrel on Thursday as the possibility of a delay in a U.S.-led military strike on Syria helped calm concerns over Middle East oil supplies. Brent crude for October delivery hit a low of USD 114.94 a barrel, down USD 1.67, before recovering to trade around USD 115.75 by 11:10 GMT, usatoday.com informs. It jumped over 5 percent in the previous two sessions, posting its strongest two-day gain since January 2012. October U.S. crude fell USD 1.50 to a low of USD 108.60 a barrel before rallying to around USD 109.30, following a near 4 percent gain over the past two days. “The market is reassessing the supply implications of the conflict in Syria,” said Eugen Weinberg, global head of commodities at Germany’s Commerzbank, Wall Street Journal informs. “Our view is military action will not destabilise the whole Middle East, which means the risk premium is being overstated. If the conflict is contained in Syria, prices are too high.” Oil has jumped this week to multi-month highs on fears that the potential strike on Syria could spread unrest to major oil producers in the Middle East and disrupt supply.
Even without disruption to supplies from key oil producers such as Saudi Arabia and Iraq, the oil market already has a host of supply issues to worry about. Libya’s crude output has fallen to around 250,000 barrels per day (bpd) from pre-war levels of 1.6 million bpd as workers’ strikes crippled exports, Prime Minister Ali Zeidan said on Wednesday. Iraqi oil production has fallen by around 500,000 bpd due to maintenance and problems with local pipelines, while output has also been restricted from the North Sea, the Gulf of Mexico, the Black Sea and Nigeria. Analysts say between 2 million and 3 million bpd of oil has been removed over the last few months, tightening a market that otherwise would have been well supplied. Analysts expect U.S. crude futures to weaken against Brent, keeping the price spread at more than USD 5 a barrel, as domestic production continues to rise from shale resources.
Price increases in Romania
‘One of the recent effects of evolution in the Middle East was the increase by 50 percent of the price of oil over the last two days, with possible implications on the price of oil in Romania. According to our estimates, the alterations of oil price at global level is obvious in 50 percent in the price of oil at the filling station, and an automated adjustment against the recent evolution of the oil price would lead to increase by 2.5 percent of the oil price –from approximately 6 RON per litre now to about 6.15 RON per litre, ‘ shows a notice sent by the ING bank economists, HotNews.ro informs. With the fuel being almost 8 percent of the consumption basket, an increasing pressure on the market could have a potential impact on inflation, they say.

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