Pressured market

The pressure keeps building in the crude market, with ICE Brent crude rallying close to 88 $/b at the prompt this morning in a backdrop of Middle-eastern tensions, as Iran-backed Houthis in Yemen struck the UAE with a deadly drone attack on fuel trucks near Abu Dhabi’s airport. Yemen’s Houthi attacks were generally aimed at Saudi Arabia, the largest belligerent of the region in the Yemen war. The escalation in the region was likely, as UAE’s foreign ministry mentioned retaliations. Apart from Brent crude price rallying strongly, diesel prices are also soaring, with ICE Gasoil cracks now at 14.35 $/b and a backwardation two times stronger than Brent’s backwardation (currently at 75 cents). In Europe, as denoted by the European Commission’s economic bulletin, prices are reaching all-time highs, as the dollar remained strong in a post-pandemic era, contrary to the period of high dollar-denominated prices in 2010-2014 era. Furthermore, tax burdens were added progressively to fuel prices to support investment in renewable energy.