Key facts
- Global oil prices surged past $95 a barrel, reaching their highest in six weeks.
- Attacks on shipping lanes in the Strait of Hormuz and Bab al-Mandab are disrupting oil tanker passage.
- Oil prices jumped over 5% following joint US-Saudi strikes in Iraq and Iran's missile attack on US forces in Jordan.
- Brent crude reached $87.95 and WTI traded at $82.89 amid renewed Middle East hostilities.
- Refined product markets remain tight with record-high refining margins.
- Geopolitical tensions in the Middle East and Ukraine, export bans, and low global fuel inventories are impacting refined fuels.
- Marine gasoil (MGO) prices in Europe are rising faster than fuel oil due to tight supply.
- Rotterdam MGO sales in Q2 surpassed Singapore for the first time since EU anti-dumping duties on Chinese biodiesel.
- Protests in Libya threaten to halt gas and fuel supplies from the Mellitah Oil and Gas complex.
- Libyan protests aim to pressure the Government of National Unity to resign.
Global oil prices have surged, with Brent crude surpassing $95 a barrel, its highest in six weeks, and WTI trading at $82.89, following a more than $3 increase amid renewed Middle East hostilities. The escalation is attributed to several factors, including attacks on shipping lanes in the Strait of Hormuz and Bab al-Mandab strait, which are disrupting oil tanker passage and raising concerns about global energy flow. Joint US-Saudi strikes against Iran-aligned militants in Iraq and Iran's missile attack on US forces in Jordan have also contributed to the price jump. This heightened tension caused US stock futures to erase gains and Bitcoin to slip.
Despite the surge in crude oil prices, refined product markets are experiencing a crunch, with record-high refining margins. This is driven by geopolitical tensions in the Middle East and Ukraine, export bans, and low global fuel inventories, which are impacting diesel and gasoline prices more significantly than crude. In Europe, Marine Gasoil (MGO) prices are rising faster than fuel oil due to a supply squeeze. Rotterdam sales of MGO in the second quarter have surpassed Singapore for the first time since EU anti-dumping duties were imposed on Chinese biodiesel. Additionally, protests in Libya over power cuts and high electricity bills have escalated, with demonstrators entering the Mellitah Oil and Gas complex and threatening to halt gas and fuel supplies to Italy. These protests aim to pressure the Government of National Unity to resign.
The current market tightness and price volatility are exacerbated by ongoing geopolitical instability in critical energy-producing and transit regions. Disruptions to shipping routes, direct military actions, and internal political instability in oil-producing nations create a complex and unpredictable supply landscape. Furthermore, the situation is compounded by existing low global fuel inventories and restrictive export policies, which amplify the impact of supply shocks on refined product prices.