“In the first weeks of next year, the price of oil moved below the level of $80 a barrel. In the last week, the price fluctuated between $76 and $81 a barrel,” said Indrek Sassi, head of motor fuel prices at Circle K Estonia. The price of oil on the world market rises due to attacks on merchant ships in the Red Sea, and China’s economic performance declines.
The main factor lowering the price of oil on the world market is the current state of the Chinese economy. “China’s economic growth was 5.2% in the fourth quarter of last year, slightly lower than analysts expected, but did not add optimism to markets. The mediocre indicators rather raise the question of whether record levels of Chinese crude oil forecast for 2024 can still be achieved,” Sassi said.
Sassi also highlighted the appreciation of the US dollar against the euro as a factor influencing the price. “The strengthening of the dollar is linked to comments from Federal Reserve officials, which reduced market expectations for aggressive interest rate cuts,” Sassi explained.
Bad weather in the United States
According to Sass, attacks by Hutu rebels on merchant ships moving in the Red Sea over the past week have undoubtedly contributed to the rise in oil prices. “On the one hand, the attacks forced merchant ships to avoid the area in question and to choose a significantly longer route for the movement of merchant ships, on the other hand, the situation in the region is tense due to attacks by the army led by United States coalition against Houthi military targets. There is a danger that the conflict will expand because, according to the Hutu rebels, they are now also attacking American merchant ships in addition to ships linked to Israel”, Sassi described the tense situation in the Red Sea .
The head of motor fuel prices also pointed out that bad weather conditions in the United States are factors pushing up oil prices. For example, in the Bakken region of North Dakota, one of the largest oil-producing regions in the United States, extreme cold recently reduced oil production by 50%, according to recent estimates. Furthermore, official information that the crude oil handling volume of Chinese refineries increased by 9.3% in 2023 also had a positive effect on oil prices.
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2024-01-18 08:15:06
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