JP Morgan assures that the conflict in the Middle East is a growing risk for the energy markets

JP Morgan assures that the conflict in the Middle East is a growing risk for the energy markets

JP Morgan said this Tuesday that the conflict in middle East remains a growing risk for energy markets, while crude oil prices opened the market with a price increase.

The recent attacks on ships in the Red Sea by Iran-backed Houthi militants in Yemen are disrupting international trade on the shortest sea route between Europe and Asia. The attacks forced several shipping companies to divert their ships.

Likewise, the aircraft attacks unmanned vehicles will likely cause a reduction in refining capacity and export of Russia and will add uncertainty to the global market for Petroleum, primarily impacting the markets for petroleum products rather than crude oil, the bank said in a note. Meanwhile, the oil refinery in the Russian city of Yaroslavl is operating normally after Monday’s attempted drone attack, regional governor Mikhail Yevrayev said.

“At $82, we estimate Brent is trading today only about $4 above its fair value, with $2 added to account for rising freight costs,” JPMorgan added.

Crude oil rises amid international tensions

The crude oil prices rose this Tuesday after losing more than 1% the day before, as the escalation of tensions in the main oil-producing region middle East fueled supply concerns, although the bleak economic outlook for China They limited profits.

At mid-morning, the futures of the Brent March contracts, which expire on Wednesday, rose 8 cents, or 0.1%, to $82.48 a barrel, while the most active April contract gained 13 cents, or 0.2%, to $81.96. Dollars. US West Texas Intermediate (WTI) rose 24 cents, or 0.3%, to $77.02.

Both contracts fell more than a dollar on Monday, as the worsening housing crisis in China fueled concerns about demand from the world’s largest crude consumer, after a Hong Kong court ordered the liquidation of the real estate company China Evergrande Group.

Meanwhile, Washington vowed to take “all necessary measures” to defend its troops following a deadly drone attack in Jordan by militants backed by Iran. “If the tensions between USA and Iran escalate, especially through direct confrontation, the risk of Iranian oil supplies being negatively affected increases,” he said. Vivek Dhar, Commonwealth Bank of Australia analyst. “Iran’s oil exports are probably the most vulnerable through potentially increased sanctions enforcement,” she added.

For its part, Iran exported between 1.2 and 1.6 million barrels per day for most of 2023, Dhar added, representing between 1 and 1.5% of supply. world tanker. However, concerns about the outlook for the Chinese economy and the possible consequences of Evergrande’s liquidation order limited gains, according to analysts.

On the supply side, while the February 1 OPEC+ meeting is unlikely to make a decision on the group’s oil policy for April, analysts hope it could shed some light on production plans.

Source: Ambito

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