A huge boulder from the heart fell to all who watched several days’ drama set in the Suez Canal. The 400-metre-long container ship, which had been blocking the canal for several days, sailed again and a key artery of sea traffic managed to dislodge.
The immediate response to information that freighters waiting before the Suez Canal were set to move again was the fall in the price of oil. The brent-type barrel discounted nearly two per cent below $64. Texas’s WTI even weakened by more than two percent and only narrowly held above $60 a barrel. In recent days, the price of black gold has surged as far as $65 amid fears the Suez Canal will be blocked for weeks and tankers will not reach Europe in time.
But the euphoria from oil cheapening may again soon be tamed by the impending OPEC+ Group meeting scheduled for early April. There is expectation in the markets that representatives of the group’s countries will agree to extend the mining restrictions until June as compensation for weak demand for black gold. Production is also expected to continue to be constrained by a key player in the group, Saudi Arabia, which has cut oil production beyond the agreed framework. Such an outcome of OPEC+ negotiations would appear to prevent further significant cheapening of oil in the global market.