The price of crude oil rose on Friday in line with
short-term supply uncertainties.
As of 10:30 GMT, the price of WTI and Brent stood at
$68.45 and $71.98 respectively - with a rise of 1.53% and 1.29%.
On political front, the bomb attack by the ISIS-K in
Afghanistan targeting the US troops sent the shockwaves beyond the beleaguered country
and the ripples are felt across many sectors, including the crude oil markets.
Of course, Afghanistan is not an oil producing
country. It, however, borders on countries that are key players in the crude oil
realm, both as significant buyers and producers.
The ideologically-driven militant activities could spill
over porous borders easily and suck up the neighbours into the cauldron of what
President Biden called, ‘for-ever-war’.
In short, no regional country that borders on Afghanistan can claim to be insulated from the fast-evolving tentacles of militant threats.
In addition, the sudden rise in oil price can also be attributed to the anticipated supply crunch in the US Gulf Coast in the next
few days due to the strong tropical storm that has been brewing in the Caribbean
Sea.
The latest weather models show Hurricane Ida is heading
towards the southern states of the US and the atmospheric conditions are
conducive for it to become a severe storm or even a serious hurricane.
There are already weather warnings in place for the
Gulf Coast of Louisiana, including New Orleans, Mississippi and parts of the
Alabama coastline. Along parts of the Alabama coastline to the Florida border,
a tropical storm watch is in place.
Although tropical storms evolve rapidly, both in
magnitude and direction, more often than not, defying the rigid models, the path of
the Hurricane Ida appears to be making a direct hit along the US Gulf Coast.
The severe storm is going to affect the main oil
producing region in the US in the next few days. The oil companies have already
airlifted their staff away from the region; BP PLC, BHP, Chevron, Equinor and
Royal Dutch Shell have begun taking workers away from offshore facilities,
before they bear the brunt of the storm at the weekend.
It is not just the production of the US crude oil
that is going to suffer due to the oncoming storm. Over 45% of the total US
refinery activities lie in the Gulf Coast and the impact on the supply, in this
context, is understandable.
