- Oil is trading lower, reversing gains from Friday
- Prices rallied 3% on Friday amid news that Israel had expanded military operations against Hamas
- Saudi Arabia may pause price hikes for oil delivered to Asia (BBG)
- Saudi Aramco is expected to keep pricing for Arab Light crude delivered to Asia for December delivery unchanged due to weak refinery margins undercutting demand for oil cargoes
- While Brent and WTI futures have risen since the October 7 attack on Israel, the physical market has shown signs of softening as fuel prices have fallen and freight rates have increased
- According to consulting firm OilChem, refining margins at China’s largest state-owned refiners are close to break-even levels, while smaller processors are being pushed to curb their output
- World Bank warns that supply disruption could send oil prices above $100/Bbl (BBG)
- The World Bank said that a disruption due to crude supplies could take between 500 MBbl/d to 2 MMBbl/d off the market
- The bank said that a larger escalation of conflict in the Middle East could lead to a 3-5 MMBbl/d disruption, and the biggest disruption would be 6-8 MMBbl/d, similar in magnitude to the 1973 Arab oil embargo
- They forecast oil prices at $157/Bbl under the largest disruption scenario, while their baseline is for prices to average $90/Bbl in the current quarter before averaging $81/Bbl next year