Crude Oil value chain products continue an upward rally on Kazakhstan turmoil & Libyan oil supply outages

Amid Kazakhstan’s upheaval and cut down in Libya’s oil output, crude oil futures have attained 6% gains in the first week of January 2022. On the 6th of Jan, Brent crude oil rose to 82.69 per barrel while WTI rose to 80.17 per barrel, the highest since November. A continuous upward trend in the crude oil prices poses a burden on all value chain products including naphtha, benzene, toluene, xylene, and their derivatives etc. Robust demand from the downstream industries and exorbitant crude oil fundamentals consequently pushed the prices of all crude value chain products.

Kazakhstan accounts for about 2% of crude oil production globally, producing around 1.6 million barrels per day hence, extension in unrest in the region is going to impact the overall crude oil output significantly. Similarly, supply outages in Libya due to damaged pipelines and force majeure on several export terminals, cut down Libyan oil output to 7,29,000 bpd that is recorded as the lowest in more than a year. Thus, global factors such as falling US oil inventories, Kazakhstan unrest, climbing omicron cases and supply issues in Libya have driven the crude oil futures in an upward trajectory.

Benzene, Xylene, and Toluene prices are increasing constantly since mid of December in almost all the regions including the USA, APAC, MEA, and Europe on the back of strong demand and fluctuating crude oil prices. Other factors such as expensive imports, rise in production costs, logistics issues also contributed to the inflation in the value chain products prices on a global level.

Acc. To ChemAnalyst, all the crude oil value chain products are expected to rise further as there is no expected relief in the crude futures. However, Crude oil futures may ease in the coming month if the oil production increases by 400000 barrels per day in February as per the OPEC+ meeting, which will consequently relax the values of crude oil derivatives in the near term.