Israel-Hamas ceasefire has little impact on chem markets, could trim geopolitical premium
Adam Yanelli
15-Jan-2025
HOUSTON (ICIS)–A ceasefire and hostage release agreement between Israel and Hamas announced on Wednesday is unlikely to have much of an impact on crude oil and chemical markets, though it could lower the geopolitical premium.
The agreement was reached through diplomacy by the US, Egypt, and Qatar, and will be implemented for the most part by the incoming administration of President-elect Donald Trump, US President Joe Biden said in remarks from the White House.
ICIS feedstocks analyst Barin Wise said he does not expect that the deal will have a meaningful impact on crude oil markets because the affected region is not oil producing.
“This may trim the geopolitical premium in crude since it eliminates a hot spot in the Middle East,” Wise said. “However, if we look at the market today, crude is up big on other factors, more than offsetting any effect the ceasefire may have.”
Crude prices surged on Wednesday largely in response to fresh US sanctions on Russia, which the International Energy Agency said could crimp global supply.
Futures prices for WTI settled on Tuesday at $77.50/bbl and rose to $79.51/bbl before midday. WTI settled at $80.04/bbl on Wednesday.
IMPACT ON SUEZ CANAL
TRAFFIC
The agreement could help with capacity
constraints in commercial shipping as container
ships have been avoiding the Suez Canal for
more than a year because of attacks by Houthi
rebels on commercial vessels.
Ships have been forced to use the much longer route around the Cape of Good Hope, which tightened shipping capacity and pushed costs for shipping containers higher.
The reopening of the Suez Canal would have the greatest impact on normalizing the Asia-to-Europe container shipping route, but would also affect Asia-US rates, as shipping capacity would surge once carriers were able to access the shorter route.
Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and shipped in tankers, container ships transport polymers – such as polyethylene (PE) and polypropylene (PP) – are shipped in pellets.
They also transport liquid chemicals in isotanks.
Thumbnail image shows a crude oil tanker. Photo by Shutterstock
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