Oil trader Gunvor doesn’t expect Middle East conflict to curb supply

Oil supplies from the Middle East will not be affected by the conflict in the Middle East, according to Torbjorn Tornqvist, co-founder and chairman of one of the world’s largest independent oil traders, Gunvor.

“I’m very confident that this will have no impact on oil supply at all,” Tornqvist told the UAE Energy Markets Forum on Tuesday, commenting on the Middle East conflict.

Instead, “it appears that the market is more focused on concerns about the lack of growth in oil demand,” Tornqvist said, according to Bloomberg.

International crude oil prices have largely ignored the latest escalation in the Middle East, even amid increased risks of an all-out Middle East war as Israel continues to pound Lebanon after killing Hezbollah leadership last week.

By early Tuesday, both benchmarks Brent and WTI were down about 1 percent as lingering concerns about demand and large spare OPEC production capacity overshadowed supply risks from the Middle East conflict.

Many analysts believe that the geopolitical first in the Middle East is already factored into the price of oil.

“The oil market’s response to developments in the Middle East over the weekend was somewhat muted. The market has become increasingly numb to tension in the region, given that after nearly a year of conflict there has still been no impact on oil output,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in -a note from Monday.

Supply risks could arise if Iran gets more involved in the conflict, but OPEC relies on a good amount of spare oil production capacity, making the market less concerned about supply disruptions, they added.

“Crude remains limited near recent lows as geopolitical risk supply remains absent, with traders instead focusing on the prospect of additional and currently unwelcome supply,” Saxo Bank said in a note on Tuesday.

By Charles Kennedy for Oilprice.com

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