An attack on Abu Dhabi and rising tensions between Ukraine and Russia. Both cases are causing additional unrest in the oil market. This uncertainty is also clearly reflected in the listing for Brent oil.
The quotation of Brent oil has risen again. On Monday, January 17, the price closed at $86,51 per barrel, one day later it was $88,64 per barrel. The price has now fallen slightly, but at $87,30 per barrel, oil is still at a level not seen since 2014.
The immediate cause of Tuesday's price spike was a drone attack on a production site of Abu Dhabi National Oil Company (ADNOC). Three tankers were blown up. Responsibility for the attack has been claimed by Yemen's Houthi. Although there was no damage to the production installations, traders were very shocked. Supply is currently tight and anything that can negatively influence it therefore has a relatively large effect on the market.
Both OPEC+ and the IEA released a forecast for this year's demand this week. Both agencies expect oil demand to grow to 100 million barrels per day. Sources at OPEC+ report that it is not inconceivable that oil will break the $100 barrier in the not too distant future. The cartel would not like it if this actually happens.
Tension in Europe
The increasing tensions between Ukraine and Russia and the position taken by the European Union and the United States also have a major effect on the market. The chance that Russia will invade Ukraine is increasingly seen as real. A large-scale attack, in which Russian tanks cross the border en masse, is not so obvious. A scenario in which the army will support separatist groups - as in 2014 - is considered more likely.
Although the West appears unwilling to get involved in a possible conflict with soldiers on the ground, sanctions could hit Russia hard. Europe is largely dependent on Russia for its energy supply, especially in the field of gas. Putin uses these deliveries as leverage, but at the same time the Russian budget also relies heavily on the revenues. Reuters reports that the United States government has spoken with a number of oil and gas companies about a contingency plan to supply the European Union with energy if supplies from Russia are sanctioned due to an incursion into Ukraine.
There is also speculation about Russia's disconnection from the international payment system SWIFT. Then selling oil in dollars is virtually impossible for Russia and China - with which the Russians have their own payment system - remains one of the few destinations. This also severely disrupts the sale of oil from the Middle East.
Diesel price
The geopolitical tensions are also reflected in the diesel price. On Monday, January 17, the price rose to €128,02 per 100 liters. On Thursday, January 20, this rose to €130,02 per 100 liters. The price dropped slightly again on Friday 21 January. But at €129,78 per 100 liters, diesel is still unprecedentedly expensive.