During the early trading session in Asia, Brent crude oil futures prices fell as the market assessed the new dynamics in the Mediterranean region.
As of 12:00 PM Beijing time, the Intercontinental Exchange (ICE) Brent crude oil contract price was $74.24 per barrel, down $25 from the settlement price on December 13, and up $1.08 from the previous trading day.
The price of the main crude oil futures contract on the New York Mercantile Exchange (Nymex) was $70.95 per barrel, down $34 from the settlement price on December 13, and up $1.27 from the previous trading day.
On December 15, the Libyan National Oil Corporation (NOC) declared force majeure at its Zawiya refinery, which has a daily processing capacity of 120,000 barrels, following clashes involving armed groups near the facility. Zawiya is the largest operational refinery in the country, with most of its output consumed domestically. The crude oil used at this refinery comes from the El Sharara oil field, led by Repsol in Libya.
Over the past decade, political instability has forced multiple oil production facilities in Libya to close. The El Sharara oil field resumed operations in early October after a previous forced shutdown also affected other oil fields in the country.
On the other side of the Mediterranean, the ousting of President Bashar al-Assad has made trade relations between Syria and Iran uncertain. As Assad's closest ally, Iran has been the main source of Syria's crude oil and petroleum product imports since Western sanctions were imposed on Damascus in the early years of the 2011 civil war.
Consulting firm FGE estimates that Iran has been supplying Syria with about 10,000 to 20,000 barrels of crude oil annually in recent years. However, these trade flows are no longer assured, as the main armed group overthrowing Assad, Hayat Tahir al-Sham (HTS), has close ties with Iran's regional rival Turkey. Turkey and Egypt have become potential suppliers as both countries have previously sent goods to Libya.
Meanwhile, after another large-scale attack on Ukraine's energy infrastructure by the United States, the U.S. provided $500 million in weapons and other equipment to Ukraine.
Russian President Vladimir Putin has extended the decree prohibiting Russian oil exporters from complying with the price cap mechanism led by the Group of Seven (G7). The ban will remain in effect until June 30, 2025. The initial decree was issued in response to the crude oil price cap introduced in December 2022 and has been extended in December 2023 and June this year.
The price cap mechanism prevents Western traders, ship brokers, insurance companies, and financial service providers from participating in Russia's maritime oil exports to third countries if the cargo price exceeds the agreed price cap—$60 per barrel for crude oil, $100 per barrel for high-value products, and $45 per barrel for low-value products. The price cap system is designed to limit Russia's oil revenues while allowing the transportation of crude oil and products to continue.
(The above content comes from the latest insights of the independent international energy and commodity price assessment agency Argus.)
Article reposted from: Jin Shi Data