The Commodities Feed: Oil Surges Amid Escalating Tensions

The Commodities Feed: Oil pushes higher on rising tensions

Oil extended its upward rally this morning amid continuing tensions in the Middle East. Reports of drone attacks by Ukraine against facilities on the Baltic coast – a key oil export route for Russia, has further supported the oil market.

 

Energy: Brent holds above US$80/bbl

• The oil market continued to rally this morning with ICE Brent trading around US$80.4/bbl as of the time of writing. The heightened geopolitical tensions have continued to provide support to the oil market with the recent reports of more airstrikes by the US and UK against the Houthis in Yemen. Meanwhile, drone strikes by Ukraine have shut down a Novatek PJSC gas-condensate terminal on the Baltic coast over the weekend, raising concerns for the oil exports from Russia’s western ports.  
• North Dakota’s pipeline authority estimates that oil production in the region was down around 250-300Mbbl/d as of 22 January due to the operational challenges amid the cold snap. The estimates have slightly improved from Friday’s estimate of being down around 350-400Mbbl/d as the weather has improved. The extreme cold weather in the US has also impacted refining operations in the country with around 15% of refining capacity in the Gulf Coast region reported to be offline as of last Friday.
• Libya could resume its oil exports and production from its largest oil field which has been shut for about three weeks. The National Oil Corp. said that oil output at Sahara fields will restart as the force majeure is lifted. The restart of the operations came after the local governments agreed to meet most of the demands from protestors. Crude oil production at the oil field stood at around 270Mbbls/d earlier.