Risk Premiums Soar, Oil Records Biggest Surge Since 2022
Oil prices continued their rally on Friday (March 6th) despite volatile movements, as the market continued to assess supply disruptions caused by the Middle East war, which entered its seventh day. Brent was around $86 per barrel and WTI was above $81 per barrel, still recording a gain of around 17% for the week. This increase marked the biggest weekly surge since Russia's invasion of Ukraine in 2022.
The main source of pressure remains the Strait of Hormuz, a strategic energy route that carries about a fifth of global oil flows. Commercial flows have weakened sharply due to security risks, insurance costs, and operational uncertainty, forcing some producers to adjust production and logistics chains.
Disruptions have also spread to refined products and Asian markets. Reuters reported that fuel oil supplies from the Middle East to Asia have plummeted, driving up bunker fuel prices in Singapore and increasing shipping costs as buyers seek alternative sources elsewhere.
On the policy front, Washington is preparing mitigation measures to contain pressure on energy markets. Reuters reported that the US Treasury Department issued a waiver allowing purchases of Russian oil already on board vessels (specifically to help Indian refineries), in an effort to ease tight supplies in Asia.
Saudi Arabia is also trying to maintain supply by diverting some exports to avoid Hormuz, including ordering some buyers to load cargoes from Red Sea ports. However, the bypass's capacity is limited and tanker rates are rising, keeping the supply risk premium high.
Source: Newsmaker.id
