Ongoing Geopolitical Risk & Competing Supply/Demand | August 2019 Advisor Preview

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Competing market forces sparked significant daily energy price turbulence through much of July, though both crude oil and diesel prices finished the month near where they started. The DOE retail price index was noticeably flat, however, exemplifying the distortion that exists for non-Breakthrough shippers. In this edition of the Breakthrough Advisor, the Applied Knowledge Team provides a detailed analysis of what drove this behavior, while offering an updated outlook and forecast through the first half of 2021 based on developments in the world oil market, global economy, and escalating geopolitical landscape.

The Advisor Team uses a data-driven approach to best represent the value of market knowledge to shippers, in addition to presenting actionable insights into what will influence diesel prices in the mid-to-longer term. Remaining cognizant of the drivers of fuel price volatility remains crucial to understanding total transportation fuel spend.

Geopolitical Risks Continue

Since Iranian sanction waivers were lifted on May 1, a series of oil tanker, pipeline, and drone attacks, preventative military exercises, and periodic threats near the lucrative Strait of Hormuz cast a growing level of price risk over the global energy market. Similar events occurred again in July, placing the Middle East and its role in the world energy market in a position with inevitable risk moving forward.

How has this ongoing risk influenced energy prices, and what is truly at stake from a supply perspective if it continues to escalate? Gain further insight in the August edition of the Breakthrough Advisor.

Supply or Demand-Driven Market?

Geopolitical uncertainty in the Middle East – specifically involving Iran, the Persian Gulf, and the Strait of Hormuz – places an inherent level of risk on the global energy market. In addition to these circumstances sporadic output disruptions among various key oil producers, the recent extension of the OPEC+ production cuts, and a likely interest rate cut by the US Federal Reserve would normally lead to bullish market sentiment. Softened demand forecasts amid US-China trade relations, weaker global economic figures, and steady US production growth have progressively emerged, however, overshadowing the current concerns of constrained supply and limiting the upward price pressure.

What were the specific price implications of this supply-demand balancing act, and what did it mean for fuel prices for shippers moving goods to market? Gain further insight in the August edition of the Breakthrough Advisor.

This edition of the Breakthrough Advisor publication provides a detailed synopsis of the energy market’s most pressing news, events, and data-driven insights concerning shippers’ fuel management strategies. If interested, you can gain further details on rapidly changing market dynamics and industry trends by signing up for the Breakthrough Advisor Brief or contacting the Applied Knowledge Team directly.

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