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Geopolitical Risks Support Tight Oil Market in H1: Macquarie

OIL

Oil markets are expected to remain tight through the first half of 2024’s with continued support from heightened geopolitical risks according to Macquarie Group last week.

  • Risk premium from the more aggressive Houthi attacks and drone strikes on Russian refineries could support a rally above the recent $75-$85/bbl range.
  • Turnarounds and unplanned outages in the US have provided strength to refinery margins.
  • European diesel cracks supported by reduced supply and distorted arbs from ships rerouting around Africa and increased costs.
  • Asian margins increased amid refinery maintenance.
  • The second half of 2024 may turn more bearish amid large supply surpluses.

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