Each week, Al Attiyah Foundation publishes its energy market review, bringing you the latest global news from the oil, gas and petrochemicals sector.

Oil Climbs 1% as Tankers Avoid Red Sea After Strikes on Houthis

Al-Attiyah Foundation - Weekly Energy Market Review

Oil rose 1% on Friday, 12 January, as an increasing number of oil tankers diverted course from the Red Sea following overnight air and sea strikes by the US and Britain on Houthi targets in Yemen. Brent crude futures settled 88 cents, or 1.1%, higher at USD78.29 a barrel. US West Texas Intermediate crude futures climbed 66 cents, or 0.9%, to USD72.68. While the diversions were expected to push up the cost and time it takes to transport oil, supplies have not yet been impacted, analysts and industry experts noted, easing some of the earlier gains in prices. For the week, Brent was down 0.5% and WTI 1.1% lower. Earlier in the week, sharp price cuts by top exporter Saudi Arabia and a surprise build in US crude stockpiles spurred supply worries. Although the lack of shipping through the Red Sea does create transportation issues for some crude supplies, the impact on the physical oil markets is, thus far, minimal, analysts said. The escalation has fed worries the Israel-Hamas war could widen into a broader conflict in the Middle East, disrupting oil supplies. Diversion of tankers around South Africa will also push up freight rates as ships take longer routes. The Red Sea, a key route between Europe and Asia, accounts for about 15% of the world’s shipping traffic.

Asia Spot LNG Prices Fall to 7-mth Low as Stocks Remain Plentiful

Asian spot liquefied natural gas (LNG) prices slid for an eighth consecutive week to hit their lowest levels in seven months, as healthy storage levels in both Europe and northeast Asia continued to weigh on prices. The average LNG price for February delivery into north-east Asia dropped nearly 10% to USD10.10 per million British thermal units (mmBtu) from USD11.20 last week, industry sources estimated, its lowest level since 9 June. Despite colder weather arriving and forecast to continue in Europe, the slide in flat price gas markets has continued as stocks remain healthy for this point in heating season, analysts said. Lower LNG prices have prompted Asian importers, largely from China and India, to snap up spot cargoes this week, though Chinese demand may cool around the Lunar New Year holiday period in mid-February. LNG stocks held by major power utilities in Japan were at 2.51 million metric tons as of 7 January. This is 24% above the five-year average from 2018-22 for the end of January. In Europe, despite the cold weather, gas prices continued to ease as investors are confident that the cold spell will be over soon, and that inventories are well filled to meet the rest of the winter demand.

For related reports and other publications, visit abhafoundation.org.

Check out Marhaba’s FREE e-Guides for everything you need to know about Qatar.