Oil, Bunkers and War in Syria

The global spotlight has been well and truly tuned into the Syrian Civil War lately after the devastating use of chemical weapons. The world waits with baited breath for the United States Congress to vote on whether a strike should take place or not. The outcome of such a vote will not just determine the geopolitical footprint the US still has in the world but also help shape the outcome of what is rapidly turning into one of the bloodiest conflicts to spurn itself out of the Arab Spring Uprisings. But what does all this have to do with Specialised Products?

As we know, bunker prices are intrinsically linked to crude with the former being a direct derivative of the latter and so when the crude oil price fluctuates so does the bunker price (although sometimes this is open to port specific fluctuations). Major world events whether political or economic affect the market sentiment which will then cause the oil price to rise or fall accordingly. When supply is threatened, as in the case of Syria, oil prices increase. In this instance, prices for Brent Crude (the global benchmark) reached $114 a barrel at close on 30th August 2013. Brent crude prices have in fact risen by $7 a barrel since the end of July due to these events. As a result the average bunker price has followed suit. It is not often immediately obvious that such sabre rattling can filter down to the diverse world of Specialised Products but one thing is for sure, whatever response the US and its allies takes it is bound to affect the price of crude oil going forward and lend upward pressure on bunker prices.

So can you anticipate the market? In short. No.

Currently, Brent crude futures prices over the next year show a gradually decreasing oil price from USD 115.32 for the October down to USD 106.26 by June of 2014 (according to Reuters). However, these prices are indicative only and cannot be used to accurately predict what the price will be on any given day in the future. The same goes for bunkers. Perhaps, the only point one can take away from this is that the improving state of the global economy and increased supply may provide some overall downward pressure on prices in 2014. One thing we can be sure of however is that the open market is a volatile place and one that is completely at the mercy of global developments such as the threat of war as outlined above. If there is anything to take away from this sentiment is that no matter how far detached things may appear from the Specialised Products doorstep we can never know what might be just around the corner!MH900326710

This entry was posted in Chemicals, Clarksons, Commodities, Shipbroking, Shipping, Uncategorized and tagged , , , , , . Bookmark the permalink.

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