Energy market for the week: Russian oil hinders price growth

No matter how the two-week truce in the Iranian war looks, and no matter what they say about it, the effect has been achieved. Oil and gas prices have declined. It is still far from the previous level. And now the markets are waiting to see what happens next. It depends on whether prices will return to record levels or, at least, remain at the same level. The West is not yet experiencing a shock, while there is already a shortage in Asia. Oil prices are also held by the export of Russian raw materials, which, despite the attacks of the Ukrainian Armed Forces, turned out to be tenacious.

Oil

The announcement of a two-week truce cut oil prices and dropped them below $ 100 per barrel. The cost of the benchmark North Sea Brent from Friday to Friday decreased from $ 111 to $ 95 per barrel.

This seemed to be the most significant price drop since June last year. However, the fighting continues and supplies through the Strait of Hormuz have not resumed and oil continues to stay at $ 100 per barrel.

Oil prices were ready for the most significant weekly drop since June last year,

"The key question for the oil market is whether shipping through the Strait of Hormuz will resume. So far there are no signs of this. If oil supplies from The Persian Gulf will remain blocked, oil prices are likely to rise again," analysts at Commerzbank said.

The Iranian authorities announced the routes of movement through the strait and announced the cost of passage at $ 1 per barrel. The UAE announced that this is the same control, but under a different name.

"The Strait of Hormuz remains virtually confined, and the operation of the global oil system is far from normal," Saxo Bank analyst Ole Hansen said. In his opinion, if partial normalization has already been incorporated into stock prices, then the physical market reflects an acute shortage. Why physical supplies are traded more expensive than stock ones.

The relief for the market was the news from Reuters that the attacks of the Ukrainian Armed Forces could not prevent exports from Russia and he not only recovered, but also compensated for the losses.

Gas

Along with oil prices, gas quotations also went down. During the week, monthly deliveries from the TTF exchange decreased from $ 614 per thousand cubic meters to $ 538.

This has become a relief for European companies that are completing the heating season and starting pumping gas for the next one. It already exceeds the selection of fuel from storage facilities.

Goldman Sachs now estimates prices for the second quarter at $ 614, but does not exclude 920 if supplies from Qatar and the UAE do not resume and there is a shortage.

While it is known that Qatar has resumed part of the capacity of its world's largest LNG plant complex, however, a full restart depends on whether tankers can pass through the Strait of Hormuz.

The Secretary General of the International Gas Union, Menelaos Idreos, believes that the real problem is not a shortage of fuel, but a logistics failure.

"This is not a supply crisis. This is a supply chain crisis," he said.

Anyway, the shortage of Qatari LNG has reached Bangladesh and India, whose companies are looking for alternative suppliers, but for now they are limiting fertilizer plants.

"Most shipping companies will probably remain cautious in the Strait of Hormuz, and two weeks will not be enough to eliminate the delay," said Thorbjorn Saltvedt from Verisk Maplecroft.

Coal did not break away from the "collective" and also fell in price this week. Deliveries for a month in advance from the Antwerp-Rotterdam-Amsterdam hub (ARA) decreased over the week from $113 per ton to $104.