Business Desk – Crude Oil Price: Global oil prices increased by about 1% on Friday morning. The reason for this was that the attacks on Saudi Arabia’s East-West pipeline and crude oil production facilities had affected the country’s production and supply capacity.
Saudi Arabia’s Energy Ministry said on Thursday that due to these attacks the country’s oil production capacity has decreased by about 600,000 barrels per day (bpd). In addition, supplies from its East-West Pipeline were also cut by about 700,000 bpd.
However, the pace of increase in prices remained limited, as investors are waiting for the results of the ongoing ceasefire talks between America and Iran.
strategic bypass
The East-West Pipeline is a 1,200 km long, dual pipeline system located in Saudi Arabia. It transports crude oil from the Eastern Province to Yanbu port located in the Red Sea, so that there is no need to pass through the Strait of Hormuz for export. Its capacity is up to 7 million barrels per day.
This development is very important for India, because this pipeline was one of the alternative routes planned to import crude oil from Saudi Arabia via the Red Sea. At 8:09 am, the Brent crude June contract was trading at $96.65, 0.78% higher than its previous close. The May contract for West Texas Intermediate (WTI) rose 0.99% to $98.84 per barrel.
tension in hormuz
Concerns over potential disruptions in the Strait of Hormuz have emerged against the backdrop of a tenuous ceasefire between the US, Israel and Iran. Investors are also being kept restless. However, the rise in prices remained limited as investors and traders were closely monitoring the ongoing talks between the US and Iran in Pakistan.
Sultan Al Jaber, CEO of Abu Dhabi National Oil Company (ADNOC), said on Thursday that passage through this important waterway depends on Iran’s “permission, conditions and political convenience.”
The use of this vital waterway as a weapon in any form cannot be tolerated. This will set a dangerous example for the world. The principle of freedom of navigation will be undermined, which is the basis of global trade and, ultimately, the stability of the global economy.
“According to some estimates, 230 ships loaded with oil are ready to depart. They should be given unconditional freedom of passage through this corridor for every ship following them. No country has the legal right to decide who can pass.
Due to fall in global prices after the announcement of ceasefire, the price of Indian crude oil basket has also come down. The basket price stood at $115.52 per barrel. Indian crude oil basket is a derived basket consisting of both sweet-grade (dated Brent) and sour-grade (Oman and Dubai average) crude oils imported every month by Indian refineries.
Comments are closed.