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August Breakthrough Advisor Preview | Geopolitics Take Center Stage

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Geopolitical events were abundant throughout July as an emphasis on global trade variability influenced overall oil supply, import and export volumes, and underlying commodity prices. Furthermore, growing prices at the end of June created sentiment that similar trends would continue through July, pending the continuation of supply disruptions, geopolitical risk, global production uncertainty, and OPEC behavior.

In this month’s edition of the Breakthrough Advisor, the Applied Knowledge team addresses how the global marketplace responded to geopolitical tension, emphasizing the importance of price transparency in an evolving environment that could have price implications for your transportation supply chain.

Geopolitical Risk

Geopolitics have always been a key indicator of what to expect in terms of price volatility. However, July emerged as an especially active month for geopolitical news, creating an interesting dynamic when discussing global oil and refined product prices. Like last month’s headlines, the United States abandonment of the Iran nuclear accord continued to cause tension between the two nations, ultimately impacting the global oil picture as multiple countries began cutting Iranian imports to stay compliant with US sanctions. Though select nations may receive exemptions, it remains uncertain who will avoid the regulations altogether.  Additionally, the US and the European Union reached an agreement surrounding tariffs and trade barriers, while struggles loom throughout the Middle East regarding oil transport in the Red Sea, internal unrest in Iraq, and political division in Libya.

What are the details of this month’s geopolitical risks and how could these events impact the cost of energy that fuels your global supply chain? Find the answers in this month’s Breakthrough Advisor.

Supply and Demand

OPEC’s voice often influences oil prices as the cartel is responsible for roughly one-third of global crude production. Moreover, a strong correlation exists in the price of oil and OPEC news, and July is no exception. OPEC released initial forecasts for 2019, revealing global oil demand would decrease approximately 2.3 percent compared to 2018 demand figures. The drop in OPEC demand creates the notion there will be far less pressure put on oil producers. This comes at a time when disruptions, especially related to Venezuela’s continued economic hardships, Libyan output hurdles, and the imminent reduction in Iranian exports via the return of US sanctions, are crucial to crude oil prices. While various nations struggle to operate at maximum capacity, the United States recently achieved a domestic production milestone, reaching 11 million barrels per day and edges toward Russia as the top oil producing nation.

All things considered, will the 2019 demand forecast and stable production create excess supply that transforms current price dynamics? Hear the Applied Knowledge team’s predictions in this month’s Breakthrough Advisor.

This edition of the Advisor publication provides a detailed analysis of the industry’s most recent news and data-driven insights pertaining to your fuel management strategies. If interested, you can gain further insight into fuel market dynamics and trending industry topics by signing up for the Breakthrough Advisor Brief or contacting the Applied Knowledge team directly.

 

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