April 2023 - Portland Pricing

Monthly Pricing - 03/04/2023

Brent crude started the month at $82.45/bbl and increased to hit its highest point of the month on March 6th, trading at $86.18/bbl. This jump was closely followed by the first and only US crude stock build announcement of 2023 so far from the EIA on March 8th , suggesting a brief improvement in the demand outlook. However, Brent crude then depreciated by over $10/bbl to trade at $71.48/bbl on March 17th, as fears of a global financial crisis following the collapse of the SVB threatened demand levels. Brent crude then recovered slightly to end the month at $78.65/bbl.

GBP rose slightly from the end of February to trade at $1.21 against USD before depreciating back below $1.20 to trade at $1.18 against USD on March 8th; it’s lowest point of the month. However, the news that inflation levels in the UK had risen unexpectedly to 10.4% for February prompted the Bank of England to continue its current tightening cycle following fears that it would end any further interest rate hikes after March’s announcement. As a result, GBP increased by just under 3% to end the month at its highest level of $1.23 against USD.

In early March, an article from the Wall Street Journal spooked markets citing rising tensions amongst OPEC+ members Saudi Arabia and the UAE just as investors looked to OPEC+ to potentially revise its previous output cut to ease market volatility. Instead, this volatility was then amplified by the collapse of the Silicon Valley Bank and the subsequent banking turmoil in the US which saw the demand appetite drop considerably for fears of a wider financial crisis. Towards the end of the month, all eyes were on President Xi Jinping’s visit to Moscow as he aimed to facilitate peace talks between Russia and Ukraine with his 12-point plan.

Price Drivers

Supply Iraq has temporarily suspended 450,000 bpd of crude exports following the results of a longstanding arbitration case against Turkey in which the ICC ruled in favour of Iraq on March 27th, with the 2 countries yet to reach an agreement on how to move forward going into April. The ongoing strike action in France over the proposed changes to its pension system have caused major supply disruptions across the country throughout March, as over 30% of refinery workers and dock workers joined the protests.

Demand Following the collapse of the Silicon Valley Bank on March 14th and the subsequent banking turmoil across the US in the days to follow, demand levels dropped over fears of a potential global financial crisis. Expectations that demand levels would continue to improve in China kept a floor under falling prices in March, as China posted strong economic data at the start of the month and is still set to bring new refineries online in the coming weeks.

Geo-Political China’s President Xi Jinping flew out to Moscow for the first time since Russia’s invasion of Ukraine to facilitate potential peace talks between the 2 countries, just days after the International Criminal Court issued a warrant for Putin’s arrest. In early March, figures showed that India was monopolising the discounted crude from Russia, importing over 1.85 million bpd in February – a new record and close to its 2 million bpd maximum import limit.