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Fuel oil trend

Rotterdam: $ 4 lower.
Singapore: $ 1 lower.
US Gulf: $ 3 lower.

Geopolitical re-runs, or: "No, there will not be a WWIII now" (Brent: $106.8)

The talk of the market continues to be the two geopolitical events: Russia vs. NATO and Libyan army vs. rebels. As we’ve mentioned in earlier briefings, the derived effects of the Crimean story will be here for quite a while. A lot of war-drumming is taking place, especially since roumours started circulating that the region of Transdniestria (in Moldova), just a few hundred km west of Crimea, also wanted to join Russia. NATO's Supreme Allied Commander General Breedlove warned that Russian forces on the Ukrainian border are “very, very sizeable and very, very ready”. Whilst it seems possible that Russia might recognize other regions (with a majority of Russians in them) as independent states, and thereafter approve any application to join Russia, a full scale military conflict between Russia and NATO forces is highly unlikely. The consequences of such an event would be rather dramatic – which both sides know – therefore events are likely to unfold as the following: More sanctions back and forth (which will have no effect in Russia as the government is reimbursing targeted individuals), until a diplomatic solution is found (which will not include the outcome that Crimea is reunited with Ukraine) In the meantime oil prices will likely be experiencing a rollercoaster ride as “World War III”, “Return of the Cold war”, “More sanctions”, “Tough talk on Russia by (name your politician)” take headlines.

For the umpteenth time since the overthrow of Gaddafi, there have been clashes between rebel forces controlling eastern oil terminals and the Tripoli government. And for the umpteenth time we’ll point to the fact that the yo-yo production in Libya will continue for as long as the security situation is not under control (which it will not be a quite some time). So expect Libyan oil output to swing between 200,000 bpd and 600,000 bpd.