Morning Brief – Oil Price Influences

Humphrey Percy
Chairman and Founder
Fri 24 Feb 2023

Oil Price Influences

With NYMEX WTI trading at a lowly USD 74.75, it is a good opportunity to examine what is driving the oil price.

In no particular order, in the overall climate of rising interest rates, US inventories increased by 9.9 million barrels last week-substantially more than expected. On the other side of the equation, Russia has announced it will cut its oil exports from its Western ports by 25% in March. Plus of course the expected re-opening of the Chinese economy. Overall the market expects the last point to be the driver of higher oil prices in H2 this year. All this overshadowed by a strong USD which will make it hard for oil to strengthen -yet. EUR/USD 1.0590.

China and Russia

Having pledged its support for Russia, China has defined this as friendship “without limits.” What concretely does that mean? 3 main answers:

1 Buying Russia’s energy. 2. Supplying Russia with goods that the West has withdrawn. 3. Offering the CNY as a substitute for USD with many Russian banks using CNY. 

US influence in the Middle East

For those who doubted that the US had lost much of its influence in the Middle East, take a look at IDEX the biennial Defense Fair hosted by Abu Dhabi. All the top Defense contractors there including a strong Russian presence. Despite the Ukrainewar  and the US Presidential shuttle diplomacy in recent days, the US did not succeed in persuading the Emiratis nor indeed any Gulf state to condemn Russia’s actions.


With the UK experiencing shortages of cucumbers, tomatoes, lettuces and peppers, the blame game has started with one Conservative MP setting a blustering pace by saying that Brexit could not be blamed for severe frosts in Morocco. More prosaically it seems that many UK growers who grow these vegetables in poly tunnels, faced with rocketing electricity bills, concluded that it was uneconomic to continue growing in the past year, so did not plant their crops as usual. So that is the new front where the action is taking place for saladgate: why were these farmers not subsidised for those energy costs? Meanwhile UK Minister Therese Coffey having suggested consumers substitute turnips for tomatoes promised that the crisis will be over in 2-4 weeks. Well that’s alright then. 

GBP/USD 1.2020 unchanged.

Tears in Heaven

It was this day in 1993 that Eric Clapton scooped the pool with 6 awards at the Grammys including one for this poignant song.

Would you know my name?
If I saw you in heaven
Would it be the same?
If I saw you in heaven

I must be strong
And carry on
‘Cause I know I don’t belong
Here in heaven

Would you hold my hand?
If I saw you in heaven
Would you help me stand?
If I saw you in heaven

I’ll find my way
Through night and day
‘Cause I know I just can’t stay
Here in heaven

Time can bring you down
Time can bend your knees
Time can break your heart
Have you begging please
Begging please

Beyond the door
There’s peace, I’m sure
And I know there’ll be no more
Tears in heaven

Would you know my name?
If I saw you in heaven
Would you be the same?
If I saw you in heaven

I must be strong
And carry on
‘Cause I know I don’t belong
Here in heaven

Have A Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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