Crude oil prices went up again this week as Saudi Arabia found itself at the forefront of sabotage attacks, carried out against oil infrastructure – the Fujairah port in the UAE and the East-West pipeline bringing oil from the oil-rich regions to the safer Red Sea coast. Concurrently, the US-China trade war began to spiral out of control, with both sides slapping tariffs on each other worth hundreds of billions of dollars. Add to this that backwardation is even steeper than previously foreseen (front-month to second-month Brent contracts edging beyond $1 per barrel for the first time since 2013), unexpected shutdowns and maintenances in the Norwegian part of the North Sea and you will get a cocktail fraught with problems.
With Iran now struggling to find a market niche from which it could sell at least part of its erstwhile exports, physical security of oil-carrying vessels or other infrastructure in the Persian Gulf is far from guaranteed. We will see whether the sides can be reasonable enough in this era of unreasonableness. As of today, the global benchmark Brent has been trading in the $70.5-70.8 per barrel interval, whilst WTI was hovering around $61 per barrel.
1. Guyanese Politics Start to Mess Things Up Badly
– As the Caribbean Court of Justice (CCJ) is reviewing the case whether the December 2018 vote of no-confidence against the ruling Guyanese parties (APNU-AFC) was legal, the nation’s cherished hopes of an oil bonanza…