On March 9, international oil prices fell sharply after a short-term surge. Brent crude oil fell by more than $26 / barrel on the same day. Finally, the two major crude oil futures fell by more than 10%.
As of the closing on March 10 Beijing time, WTI crude oil futures closed at US $108.7/barrel, down 12.13%; Brent crude oil futures closed at US $111.14/barrel, down 13.16%.
In terms of news, the member states of the International Energy Agency may release more crude oil reserves to cool the market, the UAE, the main oil producing country, tends to urge OPEC to increase crude oil production, and there are signs of slowing down the geopolitical situation, all of which have brought down the oil price. Earlier, OPEC said that the current high oil price is not due to the real shortage of oil supply, but mainly due to geopolitical factors.
The recent crude oil market, with the continuation of geopolitical disputes and the different statements of oil producing and consuming countries, shows a roller coaster trend.
On March 8, the international oil price rose sharply due to the United States’ announcement of banning the import of Russian oil and gas resources. The closing price of WTI crude oil was US $123.7 and that of Brent crude oil was US $127.98/barrel.
Previously, the international oil price once approached the $140 mark, both setting the highest value since 2008. On March 7, the United States and its allies discussed banning the import of crude oil from Russia, which stimulated the crude oil market to rise again. WTI crude oil surged up to $130.5/barrel, and Brent crude oil futures rose to a high of $139.13/barrel.
Russia is one of the three major oil producing countries in the world. Its crude oil production accounts for more than 10% in the world. It is also the world’s largest crude oil exporter. Its crude oil is mainly exported to Europe, China and other places. Due to the relatively large proportion of Russian crude oil in the global crude oil market, if its crude oil export is blocked, it will have a great impact on the supply and demand pattern of the global market, which is also one of the main factors of the recent sharp fluctuation of international oil prices.
On March 8 local time, the US government announced that it would ban the import of energy such as crude oil, liquefied natural gas and coal from Russia. The British government later said it would gradually stop importing Russian oil and petroleum products by the end of this year and give the market and enterprises enough time to find alternative products of Russian crude oil.
In general, the United States and the United Kingdom import a relatively limited proportion of oil resources from Russia, which gives the two countries more confidence to reject Russian energy. However, for the EU, which is more dependent on Russian energy, it is still unable to ban the import of Russian oil and gas in a short time.
On March 8 local time, the European Commission released a plan to try to get rid of dependence on Russian energy imports by 2030, starting with natural gas. According to the data provided by the European Commission, 90% of the EU’s natural gas consumption depends on imports, of which Russian natural gas accounts for about 45% of the total imports. In addition, Russia also contributes 25% of the EU’s crude oil imports and 45% of the EU’s coal imports.
Recently, a number of international energy giants, including BP, Statoil and shell, announced that they would withdraw their project investment in Russia. However, a batch of Russian crude oil purchased by shell at a low price recently has attracted a lot of criticism.
On March 8, shell announced on its official website that its decision to buy Russian crude oil last week was incorrect and apologized for it. Shell said it would withdraw from all oil and gas businesses in Russia in stages, including crude oil, petroleum products, natural gas and liquefied natural gas.
From the perspective of the fundamentals of crude oil supply and demand, since the second half of 2020, the international oil price has been in a steady upward trend. The continuous recovery of the global economy has led to the increase of crude oil demand, and the relatively limited increment of crude oil supply has further promoted the rise of oil price and raised the range of crude oil price fluctuation.
The rise in crude oil prices will also have an impact on many downstream industries. The rise of crude oil price will first drive the rise of transportation fuel price. As an important raw material of chemical industry, the rise of crude oil price will also gradually raise the cost of pesticide, chemical fertilizer, chemical fiber textile and other industries.
According to the data calculated by jinlianchuang, a bulk commodity information agency, as of March 10, the average price of crude oil varieties referred to in China was 118.08 US dollars / barrel on the fifth working day of this round of refined oil price adjustment cycle, and the corresponding change rate of refined oil was 19.53%. The corresponding retail price limit of gasoline and diesel in China should be increased by 1080 yuan / ton.
Central China Securities Co.Ltd(601375) pointed out that with the rise of oil price, the profits of downstream refining and chemical enterprises will be under pressure, while the refining and chemical enterprises with more chemical products will be relatively less affected; However, whether the cost increase caused by the rise of crude oil price can be successfully transmitted to the downstream through the price increase of products depends on the supply and demand structure of specific industries and the supply of alternative routes. With the crude oil price entering the high oil price range, the profitability of coal chemical industry, ethane cracking, propane cracking and other light hydrocarbon routes is also expected to improve.
