Oil prices rise on Israel-Iran escalation as markets eye geopolitical developments

This week, traders will be paying close attention to oil prices, which have been rising due to worries that Israel might strike Iranian oil sites, potentially hindering Iran's recovery in oil production. Iran is a key oil supplier for China and has a refining capability of about 2.4 million barrels per day. On the other hand, the resolution of the lengthy dispute over Libyan oil production could increase supply by several hundred thousand barrels daily. Additionally, today we anticipate a corporate update from Shell for the third quarter; however, geopolitical developments will likely have a more significant influence on market attitudes.

The Asian thermal coal market is expected to experience a surge in trading this week as Chinese workers come back from the Golden Week holidays. With Chinese buyers looking to stock up in preparation for winter and recent government efforts to stimulate housing sales, there should be a strong support for imports as traders anticipate a rise in industrial demand.

In the chemical industry, attendees are convening in Berlin for the European Petrochemical Association's 2024 conference, kicking off today. Participants will revisit contract negotiations and talk about maintenance strategies, all while concentrating on the projections for 2025 in light of ongoing low demand conditions.

In the United States, the conclusion of the International Longshoremen's Association strike at ports along the Gulf Coast and East Coast is anticipated to alleviate some supply chain issues. However, there are worries that interrupted exports might lead to a surplus of inventory, which could put downward pressure on chemical prices within the country.

In shipping news, the return to regular Supramax ship traffic through the Panama Canal may threaten overall ton-mile demand. As more vessels pass through, it could diminish shipping efficiency. Moreover, after the conclusion of the ILA strike, container rates are anticipated to increase, with additional surcharges likely coming into effect by mid-October. This will have an influence on logistics expenses both within the country and around the world.

I'm Sheky Espejo. I appreciate you starting your Monday with S&P Global Commodity Insights.