From S&P Global Platts, January 24:
Our editors and analysts are keeping an eye on current oil prices and supply factors, as well as the global spare capacity over the next few months. Methanol and tin prices are also in focus, while container premiums are hitting the ceiling.
1. Geopolitical supply risks return to the fore in oil markets
What's happening? Recent oil supply disruptions include pipeline shutdowns in Ecuador affecting 270,000 b/d in December, the shutdown of 350,000 b/d from Western Libyan oilfields for three weeks through Jan. 10, and public unrest in Kazakhstan reducing January crude supply by an estimated 50,000 b/d. In addition, a deadly Jan. 16 drone attack in the UAE raises alarm in one of the only remaining sources of notable spare capacity, while odds for an Iran nuclear deal are diminishing and a potential Russian military incursion into Ukraine keeps markets on edge and risks Western energy sanctions.
Interactive: Platts Oil Security Sentinel
What's next? Oil markets currently possess sufficient spare capacity to offset sporadic outages. However, this OPEC+ buffer will fall to 1.8 million b/d by June, just as oil demand is set to grow by 3.5 million b/d in H2 over H1. Additional oil supply could potentially come from an Iran nuclear deal, although these prospects look uncertain at best, while shale activity is restrained by capital discipline relative to prior cycles. In the event that disruptions become an increased reality, then higher prices and demand destruction become the necessary balancing mechanism....
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