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

Oil Slumps 6% on Recession Worries, Strong Dollar

Al-Attiyah Foundation - Weekly Energy Market ReviewOil prices tumbled about 6% to a four-week low on Friday, 17 June, on worries that interest rate hikes by major central banks could slow the global economy and cut demand for energy. Also pressuring prices, the US dollar last week rose to its highest level since December 2002 against a basket of currencies, making oil more expensive for buyers using other currencies. Brent futures fell USD6.69, to settle at USD113.12 a barrel, while US West Texas Intermediate (WTI) crude fell USD8.03, to settle at USD109.56. For the week, Brent futures declined 7.3% while WTI fell 9.2%. Last week, the Fed bumped borrowing costs up by 0.75 percentage points, the most in more than a quarter of a century, in a bid to stem inflation that has been running at more than 8%. Central banks across Europe also raised interest rates, some by amounts that shocked markets, and hinted at even higher borrowing costs to come to tame soaring inflation that is eroding savings and squeezing corporate profits. Russia, meanwhile, expects its oil exports to increase in 2022 despite Western sanctions and a European embargo, the Russian deputy energy minister said on Friday. The EU agreed to reduce its purchases of Russian oil by around 90% by the end of 2022.

Asia Spot Prices Jump, Tracking Sharp Rise in Europe

Asian spot liquefied natural gas (LNG) prices jumped last week, tracking a rise in European gas prices, on further market tightening as an extended shutdown at a US export plant prompted buying by Japan and South Korea. The average LNG price was estimated at USD36.50 per million British thermal units (mmBtu), up USD13 or 55.3% from the previous week, industry sources said. In Europe, a further decline in Russian gas flows via the Nord Stream 1 pipeline, coinciding with an early heat wave gripping its south, deepened concerns the continent may struggle to build up storage ahead of the winter season as planned. Additionally, an extended outage at US liquefied natural gas export terminal Freeport LNG is clouding future European supplies. Freeport LNG, the operator of one of the largest US export plants, said on Tuesday that last week’s fire damage to its Texas plant would keep it fully offline until September with only partial operation through year-end. Meanwhile, analysts said that the extended shutdown should give utilities a chance to rebuild extremely low US gas stockpiles more quickly. US natural gas futures dropped about 7% to a seven-week low on Friday on forecasts for lower demand this week.

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