LONDON – As crude oil shipments through the Strait of Hormuz gradually return, Middle Eastern oil producers are offering higher discounts to entice buyers, heightening concerns about a possible global supply surplus. Petroleum markets are still being disrupted by damaged refinery facilities and high tanker freight costs, as Brent crude prices dropped more than 17% from the previous week to about USD 97 per barrel. Petroleum transportation and refining activities are under strain as shipping costs have reportedly increased to about USD 30 per barrel from USD 5 prior to the Iranian war. Global fuel prices, petroleum storage demand, and refining margins may be impacted by the imbalance between recovering crude supplies and constrained processing capacity. This might have an impact on conventional base oil markets as well as the competitiveness of re-refined base oils (RRBO).
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(Source: Reuters; The Daily Star)