LONDON: Oil prices fell by 4 percent on Monday, extending last week’s steep losses on the back of a rising US dollar and concerns that new coronavirus-related restrictions in Asia, especially China, could slow a global recovery in fuel demand.
A United Nations panel’s dire warning on climate change also added to the gloomy mood after fires in Greece have razed homes and forests and parts of Europe suffered deadly floods last month.
Brent crude futures fell by $2.82, or 4.2 percent, to $67.88 a barrel by 9:30 a.m. GMT after a 6 percent slump last week for their biggest weekly loss in four months.
US West Texas Intermediate (WTI) crude futures fell $2.85, or 4.3 percent, to $65.43 after plunging by nearly 7 percent last week. On Monday the contract fell as low as $65.15, its lowest since May.
“Concerns about potential global oil demand erosion have resurfaced with the acceleration of the Delta variant infection rate,” RBC analyst Gordon Ramsay said in a note.
ANZ analysts pointed to new restrictions in China, the world’s second-largest oil consumer, as a major factor clouding the outlook for demand growth.
The restrictions include flight cancelations, warnings by 46 cities against travel and limits on public transport and taxi services in 144 of the worst hit areas.
On Monday China reported 125 new COVID-19 cases, up from 96 a day earlier. In Malaysia and Thailand, infections hit daily records.
China’s export growth slowed more than expected in July after outbreaks of COVID-19 cases and floods while import growth was also weaker than expected.
“Both (benchmark crude) contracts look vulnerable to more bad news on the virus front, focusing on mainland China,” OANDA senior market analyst Jeffrey Halley said in a note.
China’s crude oil imports fell in July and were down sharply from the record levels of June 2020.
A rally in the US dollar to a four-month high against the euro also weighed on oil prices after Friday’s stronger than expected US jobs report spurred bets that the Federal Reserve could move more quickly to tighten US monetary policy.
A stronger US dollar makes oil more expensive for holders of other currencies.
Oil slides 4 percent on China virus curbs and climate warning
https://arab.news/rne5h
Oil slides 4 percent on China virus curbs and climate warning
- WTI crude hits lowest since May
- China's July crude imports down 20% year on year
Saudi ports brace for cargo surge as shipping lines reroute
RIYADH: Preliminary estimates suggest that several global shipping lines could reroute part of their operations to Saudi Arabia’s Red Sea ports, potentially adding 250,000 containers and 70,000 vehicles per month, according to Rayan Qutub, head of the Logistics Council at the Jeddah Chamber of Commerce, in an interview with Al-Eqtisadiah.
“Any disruption in the Strait of Hormuz not only affects maritime traffic in the Arabian Gulf but could also reshape global trade routes,” Qutub said, highlighting the strait’s status as one of the world’s most critical maritime chokepoints for energy and goods transport.
With rising regional tensions, international shipping companies are reassessing their routes, adjusting shipping lines, or exploring alternative sea lanes. This signals that the current challenges extend beyond the Arabian Gulf, impacting the global supply chain as a whole.
Limited impact on US, European shipments
The effects of these developments will not be uniform across trade routes. Qutub noted that goods from China and India, which rely heavily on routes through the Arabian Gulf, are most vulnerable to disruption. In contrast, shipments from Europe and the US typically traverse western maritime routes via the Suez Canal and the Red Sea, making them less susceptible to regional disturbances.
Saudi Arabia’s strategic location, he emphasized, strengthens the resilience of regional trade. The Kingdom operates an integrated network of Red Sea ports — including Jeddah, Rabigh, Yanbu, and Neom — that have benefited from substantial infrastructure upgrades and technological enhancements in recent years, boosting their capacity to absorb increased cargo volumes.
Red Sea bookings
Several major carriers, including MSC, CMA CGM, and Maersk, have already opened bookings to Saudi Red Sea ports, signaling a shift in operational focus to these strategically positioned hubs.
However, Qutub warned that rerouted shipments could increase sailing times. Cargo from Asia, which normally takes 30-45 days, might now require longer voyages via the Cape of Good Hope and the Mediterranean, potentially extending transit to 60-75 days in some cases.
These changes are also reflected in rising shipping costs, driven by longer routes, higher fuel consumption, and increased insurance premiums — a typical response when global trade patterns shift due to geopolitical pressures.
Qutub emphasized that Saudi Arabia’s transport and logistics sector is managing these developments through coordinated government oversight. The Ministry of Transport and Logistics, the Logistics National Committee, and the Logistics Partnership Council recently convened to evaluate the impact on trade and supply chains. Regular weekly meetings have been established to monitor developments and implement solutions to safeguard the stability of supplies and continuity of trade.
He noted that the Kingdom’s logistical readiness is the result of long-term strategic investments, encompassing ports, airports, road networks, rail systems, and logistics zones. Today, Saudi logistics integrates maritime, land, rail, and air transport, enabling a resilient response to global disruptions.
Qutub also highlighted the need for the private sector to continuously review logistics and crisis management strategies, develop alternative plans, and manage strategic stockpiles. Such measures are essential to mitigate temporary fluctuations in global trade and ensure smooth supply chain operations.
