Recovering amid Middle East tensions – ANZ

Crude is continuing its recovery from its recent slump as heightened geopolitical risks came into focus, ANZ commodity analysts note.

Demand for jet fuel in China is growing

“Israel remains on edge as it prepares for a retaliatory attack by Iran after the assassination of Hamas and Hezbollah leaders. However, a call between Iranian President Masoud Pezeshkian and French counterpart Emmanual Macron has potentially opened a diplomatic path to de-escalation.”

“Also, the political situation that shut down the Sharara oil field in Libya is not ending. The National Oil Company declared force majeure at the fields, which before the shutdown were producing about 270 kb/d.

One bright spot in the oil market is China’s demand for jet fuel. Total air traffic rose 14 percent in June compared to the same period in 2019. Domestic flights rose nearly 10 percent, according to government data. This is prompting the country’s refiners to increase jet fuel production to take advantage of the improved margins.”