– Geopolitical tensions in the Red Sea have had a minimal effect on oil prices to date given that they result in delays in the delivery of oil supplies rather than an actual disruption in the volumes removed from the market.
– The main risk from these tensions is the rise in freight rates which could hinder the declining global inflation trend that has been recently prevailing.
– On the demand side, we can see a diverging view between key organization such as the International Energy Agency (IEA) and OPEC – whereby the latter is more bullish on the increase in oil demand for 2024.
– On the supply side, each of the US, Saudi Arabia and Russia are likely to retain their positions as the top three oil producers globally in the short term given that no other country is able to achieve the scale of their production.
– It is well known that China is the world’s biggest energy consumer and importer despite also being a major producer of energy. Given that the demand for energy in the country is expected to grow, commodity exporters, particularly in the Middle East, are set to compete for market share in the country.
– The diversity of commodity suppliers that China has, gives China the upper hand in negotiating energy deals with Russia, who faces sanctions from key global economies.