Reference News Network, March 19 report - According to the website of the UK's Financial Times on March 17, oil buyers are scrambling to find alternative supplies from the Gulf region, causing crude oil prices around the world, from Norway to Kazakhstan, to rise sharply and pushing the price of crude oil traded in Oman above $150 per barrel, a record level.

The Middle East war has led to the closure of the Strait of Hormuz, isolating about one-fifth of the world's oil production from the global market, which has increased demand for crude oil with similar quality to that produced in the Gulf region.

Increasing supply disruptions have pushed some regional benchmark oil prices to historical highs, while the price of Brent crude, the global benchmark (which had surged to nearly $120 per barrel at the beginning of the Iranian war), has fallen back to just over $100 per barrel.

David Fawcett, chief economist of Argus Media Group, said: "The price increase is entirely due to the scarcity of spot supplies."

Oman exports oil from its ports outside the Strait of Hormuz. Due to the competition among markets for the small amount of oil still being shipped out of the Middle East, the price of Omani crude soared to nearly $154 per barrel on the 17th.

On the other hand, as refineries seek alternatives to Middle Eastern crude oil, demand for crude oil with a quality similar to that produced in the Gulf region has surged.

Data from Argus Media Group shows that the prices of certain grades of crude oil produced in Norway, Algeria, Libya, and Kazakhstan have reached record highs relative to North Sea spot crude. Argus Media Group has been tracking the prices of some of these crudes since the 1990s.

Fawcett said that for the Algerian Saharan Blend crude, the price may be driven by demand from the petrochemical industry, which is facing a shortage of raw materials because vessels carrying raw materials are also stuck in the Gulf.

Due to increased demand for tankers, longer routes, and soaring shipping fuel prices, buyers seeking alternatives to Gulf crude also have to pay much higher freight rates than usual.

Philip Jones-Lux, senior analyst at Spartan Commodities, said that even if the oil has a similar quality, some refineries may not want to use it because they are unsure how switching oils would affect their output. He said that some older refineries in Japan, Thailand, Indonesia, Vietnam, and Singapore may fall into this category.

Jones-Lux said that the cost of crude oil for Asian refineries has more than doubled compared to before the war began.

As the war progresses, the difference between the prices of widely used crude oil benchmarks, Brent and West Texas Intermediate (WTI), and the physical delivery price has become more pronounced.

These benchmark crude prices have not risen as much, partly because they reflect the price of low-sulfur light crude, whereas crude trapped in the Gulf region is usually heavier and has a higher sulfur content.

Ivan Matthews, head of Asia-Pacific analysis at Vortexa Consulting, an energy data company, said: "The Hormuz crisis mainly affects medium-sulfur crude oil flowing into Asia, and there are very limited options to compensate for this supply gap."

Brent and WTI crude futures also reflect the price of oil for May delivery, and some traders hope that by then, oil transportation through the Strait of Hormuz will at least partially resume, while physical purchases require earlier delivery.

Ole Hansen, head of commodity strategy at Saxo Bank, said: "It currently feels like the futures market and the spot market have become disconnected. This is the worst supply disruption since the 1970s, and Brent crude has barely managed to stay above $100." (Translated by Yang Xinpeng)

Original: toutiao.com/article/7618876153151799827/

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