Middle East Crisis sends shockwaves through Global Bitumen Markets
In a sudden turn of events, the geopolitical landscape in the Middle East underwent a seismic shift on Saturday, 7th October, when Hamas launched an offensive against Israel.
This aggressive manoeuvre not only disrupted regional power dynamics but also reverberated across the globe, primarily affecting the oil and bitumen markets.
Oil Prices Soar Amidst Middle Eastern Tensions
The immediate aftermath of the hostilities witnessed a sharp surge in crude oil prices. The escalating military tensions between Israel and Hamas have further intensified political instability across the Middle East, sending shockwaves through global markets. ANZ analysts are now suggesting that the heightened geopolitical risks in the region could bolster crude oil prices, with even more significant fluctuations on the horizon.
Furthermore, in a move underscoring the region’s volatility, Ashkelon oil terminal in Israel temporarily ceased operations on Tuesday, following the heightened tensions. Adding to the mounting pressure, Qatar issued a stern warning, threatening to halt gas exports globally unless the airstrikes on Gaza are halted.
A significant development came from banking giant JP Morgan, which highlighted potential supply chain disruptions if the US imposes stricter sanctions on Iranian oil exports or if tensions extend to the pivotal Strait of Hormuz.
China’s Economic Stimulus: A Silver Lining?
Amidst this backdrop of uncertainty, China seems poised to take economic countermeasures. Sources suggest that Chinese officials are exploring a debt issuance of at least one trillion Yuan (equivalent to $137 billion) to finance infrastructure projects, such as water-related endeavours.
While plans are still under negotiation, experts anticipate a formal announcement early this month. This fiscal stimulus could potentially drive global market growth, offsetting some of the Middle Eastern instability’s adverse effects.
Bitumen Market Reactions
The repercussions of the Middle East unrest are palpable in the bitumen market as well. During the week, Singapore’s HSFO CST180 escalated by $22, settling at $452. By Wednesday, 11th October, Singapore’s bulk bitumen experienced a modest rise, touching $522. Meanwhile, bitumen prices remained steady in South Korea and Bahrain at $430 and $440, respectively. European markets saw bitumen prices dropping between the $450-$530 range.
India, a significant player in the bitumen market, is projected to witness a $5 increase in bitumen prices by mid-October, as indicated by its domestic refineries. This upward trajectory, especially against a backdrop where oil prices dipped from $95 to $90 in a fortnight, suggests robust demand from the subcontinent.
However, the fluctuating US dollar against the Iranian Rial has introduced volatility in the bitumen market, resulting in a substantial $30 disparity between peak and nadir prices. International clients engaging with Iran have expressed concerns about the regional upheavals impacting cargo logistics in the Persian Gulf. Nevertheless, export operations in the region remain largely unaffected.
