- Rising crude oil prices are causing disruptions in global oil markets.
- VLCC rates could potentially surge to $100,000 per day.
- Escalating geopolitical tensions are raising concerns over the safety of maritime shipments.
The ongoing crisis in the Middle East has caused disruptions in global oil markets, leading to a rise in crude oil prices since Monday. This surge impacts various industries, with the shipping and tanker markets seeing notable effects, especially in VLCC rates, reports Breakwave Advisors.
VLCC Rates Follow Seasonal Patterns
Analysts at Clarksons Securities predict that VLCC rates could climb to $100,000 per day if OPEC+ members follow through with planned production increases. This trend is in line with the seasonal uptick in VLCC rates.
Following the recent Iranian missile strike, there is growing speculation that Israel might target Iranian oil infrastructure. Such a move could significantly disrupt oil supplies and impact global markets.
OPEC’s Capacity to Offset Supply Loss
According to Reuters, OPEC has enough spare capacity to compensate for a complete loss of Iranian oil supply if Israel attacks Iran’s facilities.
However, if Iran retaliates by targeting the installations of its Gulf neighbors, OPEC might face severe challenges.
Increased Insurance Premiums Expected
As concerns over the safety of maritime shipments grow due to regional instability, shipowners are likely to increase insurance premiums.
This will, in turn, drive freight rates higher, affecting the overall cost of shipping.
Fluid Situation and Supply-Demand Balance
The situation in the Middle East remains highly fluid, and any further escalation in geopolitical tensions could drastically alter the global oil supply-demand balance.
Signal’s analyst warns that such developments could send oil prices soaring.
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Source: Breakwave Advisors
