A big move today in oil, the complex is
down 3%. I guess the question is how much
geopolitical risk premium was there price then to begin with
? Yes, good morning Jumana. The oil price
has been coming down over the last couple of sessions
as we wait for an attack and now we're getting
these reports that it won't be on those oil installations
, which is a really important factor in what the
market has been looking for. We've seen kind of
a leg up in geopolitical risk this time around as
fighting intensified between Iran and Israel and we had those
direct attacks again. So we've been looking more like
a like a 5 to 10 per dollar, excuse
me, premium based on the geopolitical risk. Up
until now, we've seen swings of about$5 tops
and the market had been very slow to react to
the geopolitical risk because it hadn't been impacting the supply
. So now that we, we have that potential
of bringing Iran more into the fight here, that's
where the risk rises for an interruption of supplies because
Iran is a huge producer and they also do sit
right there on the straight of four moves, which
is the exit out of the Persian Gulf. It's
a very important. A couple of other data points
caught my attention. OPEC Plus cut their oil demand
growth estimates for the third month running and they tend
to be on the higher side anyway. But then
also crucially China oil import data once again saw imports
declining for fifth straight month. So what does that
tell you about the fundamentals here? Yes. So
that tells us kind of what's going on in the
underlying market that there's weak demand going forward. As
you said, OPEC has had some huge demand estimates
. Very optimistic, something like over 2 million barrels
a day for this year when a lot of the
analysts were were showing even earlier in the year,
slightly over a million. Now a lot saying below
a million barrels a day of demand. So that's
that's a big change. They're also tweaking their estimates
for 2025 because OPEC is supposed to bring some oil
back starting in December and that's going to increase the
supply that risks causing oversupply and some oil and storage
next year. So that's why people are a little
bit more bearish on those underlying fundamentals. And,
and one thing that we should also mention is that
markets again, were a little bit un perplexed by
the news coming out of China. They had this
meeting on Saturday about some additional stimulus which which did
talk about additional stimulus without that many details. So
the market is really watching to see if that stimulus
is going to impact kind of the retail market where
we get that fuel demand, rising fuel demand in
China causes rising crude demand and you get more barrels
flowing in there. Otherwise China's got a huge refining
complex which can export to the rest of Asia,
thereby bringing down the margins and the rest of Asia
. So we kind of need that piece to come
back for traders and the market to be a little
bit more confident about the future of oil prices.