According to Bloomberg’s newest trade intelligence, the crude oil Market has been extremely hot recently and shows no signs of calming. Traders appear to have mostly ignored whatever negative effects the Omicron wave may have had on oil demand, and for good reason: physical demand has remained strong. The current price movements for two Russian grades, Sokol and ESPO, the latter of which is particularly popular with Chinese refiners, as well as the rising premium in Dubai crude contracts, were noted in the research.
Apart from strong physical demand, oil prices have recently benefited from a number of other causes, the most recent of which being a rise in Middle Eastern tensions following a Houthi attack on the United Arab Emirates. This week, a Yemeni rebel organisation claimed responsibility for an attack that blew up three tanker trucks and killed three people, warning that it would not be the last. According to Reuters, the UAE stated that it reserves the right to “react to these terrorist attacks.”
Brent crude has gained more than 10% since the beginning of the year, and is currently trading at around $88 per barrel. The U.S. standard, West Texas Intermediate, has also been steadily rising in recent weeks, with a gain of 12 percent since the start of 2022.