Fitch Ratings has reiterated its forecast of $80 per barrel for oil prices this year, stating that a robust increase is not anticipated unless significant disruptions in transportation or production occur due to tensions in the Red Sea. The rating agency also indicated that its outlook for European gas prices remains unchanged.
According to Fitch Ratings’ analysis of the impact of disruptions in ship traffic in the Red Sea on commodity markets, these disruptions continue to contribute to the persistence of geopolitical risk premiums for key commodities.
However, the forecast for the price of Brent crude oil in 2024 remains at $80 per barrel, as long as there are no substantial disruptions in actual oil production or an increase in attacks on critical oil supplies in the Red Sea. Fitch Ratings does not expect a strong increase in prices under these conditions.
Several major companies, including BP, Shell, QatarEnergy, and numerous maritime firms, have halted traffic through the Suez Canal, redirecting their routes to Africa. While this temporary rerouting may tighten the global supply chain marginally, with supply chains needing about two additional weeks to adapt to the alternative route, it is not anticipated to have a significant impact on oil and gas markets.
Fitch Ratings also maintains its 2024 forecast for European gas prices (TTF) at $12 per million cubic feet (mcf).
The chemical sector in Europe, which is heavily reliant on imports from Asia, may be more affected by delays in shipments through the Red Sea than by supply disruptions. Considering the market conditions in the European chemical sector, which is dependent on imports from Asia, delays in shipments from the Red Sea could pose a greater risk than the disruptions in supply chains.
Fertilizer exports through the Red Sea account for approximately 7% of the global potash market and about 5% of the global phosphate rock market. Shipping costs constitute around 10% of fertilizer prices, and it is expected that the increased freight prices will exert pressure on profitability.
source: aa.com.tr / prepared by Melisa Beğiç