Further Oil Price Spikes Could Rekindle Recession Fears
White House Weighs Defense Production Act as U.S.
Refineries Maxed Out What I Cover Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the… Surging oil and fuel prices have revived inflation and recession fears, with Brent and WTI above $100 and U.S.
This week’s oil price surge sharply raised the odds of a Fed interest rate hike next week and re-launched the recession conversation, for the first time since the early weeks of the Iran war.
The price spike this week sawBrent Crude prices topping $100per barrel for the first time since July and the U.S.
benchmark,WTI Crude, exceeding $100 a barrel as well, after the U.S.-Iran tensions escalated again with no talks of a deal in sight.
For six months during the Iran war, the global and U.S.
economies have remained resilient in the face of the worst energy market disruption in history, with oil and LNG flows choked at the Strait of Hormuz.
Many countries released oil stocks from strategic reserves to fill the gap left by the restricted supply from the Middle East, China slashed its crude oil imports and limited fuel exports, and demand destruction through the high oil and fuel prices did the rest of the work to keep the oil market relatively subdued since March, with occasional spikes when tensions flared up in the Persian Gulf.
In the United States, for example, crude stocks in the strategic reserve are at their lowest level since the early 1980s.
Separately, China eased its restrictions on fuel exports and returned to buying more crude, withimports reboundingfrom the decade-low seen in June.
Crude flows from the Strait of Hormuz have somewhat recovered to an estimated half to two-thirds of pre-war levels, but fuel supply remains severely limited.
Combined with refineries outside the Middle East and Russia unable to offset the loss of supply from these two regions, the stress in fuel markets became much stronger than on crude oil prices.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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