On April 6th, the new media AXIOS comprehensively reported that the situation of the crude oil market was not optimistic. AXIOS believes that investors should pay close attention to various geopolitical factors - the Sino-US trade war, the conflict between Saudi Arabia and the Yemeni Houthi Armed Forces, and relations with Iran - the impact on the crude oil market.
On April 5th, US President Trump threatened to impose additional tariffs on China’s 100 billion U.S. dollar imports, again triggering investors’ concerns about the trade war between China and the United States. Mainly affected by this factor, crude oil prices fell under pressure on April 6. As of press release, WTI crude oil prices fell by more than US$1, a decrease of 1.89% to US$62.34/barrel, and Brent’s oil price dropped 1.42% to US$67.36.
Sino-US trade war
US media CNBC cited Pretromatrix analysis and wrote, “China is the main importer of U.S. crude oil, with daily imports of around 400,000 barrels.
If China imposes anti-dumping duties on U.S. crude oil, it will make the supply and demand situation of U.S. crude oil heavy, putting pressure on U.S. crude oil prices, which will have a negative impact on global oil prices. ”
Wall Street News The previous article also mentioned that the market is concerned that US shale oil will become the next target for China. On April 4th, the list of China-US trade countermeasures against the United States included liquid propane and other petrochemical products. According to the analysis, China can abandon the United States’ energy at any time. However, for the United States, energy is a sensitive topic. The two countries may eventually reach an agreement and China will use the ace of energy wisely.
Saudi Arabia and Yemen
In addition to the trade war between China and the United States, the escalation of conflict between Saudi Arabia and Yemen has added to the uncertainties in the crude oil market. On April 3rd, Yemeni Houthi attacked the Saudi special tanker. Although the market responded flatly to this, analysts warned that investors are over-optimistic.
AXIOS quoted Croft, Capital Markets Analyst of the Royal Bank of Canada, as saying that the state of the crude oil market could escalate as Mohammed Ben Salleman, Crown Prince of Saudi Arabia, is about to end his trip to the United States. Croft believes that the attack on the Saudi oil tank by the Yemeni Houthi Armed Forces increased the possibility of the recent war between Saudi Arabia and Yemen. It also "may end up being the trigger for the conflict between Saudi Arabia and Iran."
Sheppard, editor of the Financial Times Energy Market, also warned that current oil traders are being distracted by the brewing trade war between China and the United States, but it will not take too long for them to cease the conflict between Saudi Arabia and Yemen. Impact) Discounted.
Russia and OPEC Production Cuts Agreement
On the other hand, Russia stated that it will continue to reduce production. Previously, OPEC members reached agreements with non-OPEC oil-producing countries including Russia and decided to reduce production by 1.8 million barrels/barrel before the end of 2018 to ease the excess crude oil inventories and support oil prices. Many investors are worried about the impact on the crude oil market after the agreement expires.
However, the Russian Energy Minister Alexander Novak said that the agreement with the OPEC members may be indefinite, and proposed a joint organization with OPEC to work together for the global crude oil market.
Novak said, "In essence, this may be an international organization, convened once every six months to discuss the situation of the oil market. (including) OPEC and non-OPEC countries." Other large oil-producing countries can also participate. (Wall Street News)