Starting the week bearish, the COFR crude oil contract price on the Indonesian Commodity and Derivatives Exchange managed to make a significant recovery since mid-week and ended the week with an appreciation of 1.50%. The focus of global crude oil prices is broadly driven by several headlines such as geopolitics, development stagnation in the Suez Canal and the 15th OPEC + meeting.
Acting as a bearish catalyst, oil prices earlier in the week moved under pressure by the potential for tensions between China and the US and its allies, which was triggered by the signing of a cooperation agreement between China and Iran in the energy sector for the next 25 years. The agreement includes the contents of which include plans for long-term supply of Iranian crude oil to China as well as investments in oil, gas, petrochemical, renewable energy and nuclear energy infrastructur. On the other hand, oil weakened again towards the middle of the week as the problem of supply disruptions that occurred in the Suez Canal was resolved.
From OPEC +, oil had continued to move bearishly weighed by sentiment from the decision of the OPEC + technical expert panel which agreed to revise its global oil demand forecast for 2021 to 5.6 million bpd, down from the previous estimate of 5.9 million bpd. However, a strong push back was absorbed supported by the belief that OPEC + will maintain its production cuts, especially after the revision of previous global oil demand forecast from OPEC +.
"> Not until there, after the OPEC + production decision, Saudi Aramco raised the official selling price of crude oil for its main market in Asia in May, indicating Saudi confidence in the economic recovery in the region - for between 20 and 50 cents raise per barrel, for shipments to Asia in May. Meanwhile for Northwest European customers it was unchanged, and for US destinations it will be cut by 10 cents per barrel.
US-Iran Relations as an Upcoming Geopolitical Focus
Still faced with a complicated situation, the relationship between the US and Iran earlier this week again contributed to price fluctuations. The statement from the US authorities on Monday was considered pessimistic about the meeting with Iran which will start on Tuesday to discuss the continuation of the nuclear deal. The statement indicated that US economic sanctions on Iran would still apply, including pressure on Iran's oil sector, and in the event of this uncertainty, oil prices were also raised.
The Development of Pandemic Headlines Still Challenging
The threat of the third wave of the Covid-19 pandemic that has the potential to hinder the recovery of fuel demand is increasingly worrying. Recently, the US reported a 5% increase in new infections last week to 450,000, an increase for the third week in a row. In addition, a spike in infections has also occurred in major oil-importing country India which on Monday reported the highest number of new daily cases of infection since the pandemic began, prompting a lockdown in its largest city of Mumbai. Meanwhile in Britain, Prime Minister Boris Johnson announced on Monday he would continue to impose a ban on international travel after May 17 if infection cases continue to rise worldwide.