SEB Commodity Chief Gives Rocket and Drone Warning in New Report

If Iran is serious about a possible diplomatic solution for Israel/Hamas, it reduces the risk for an all-out regional war in the Middle East involving Iran and thus reduces the risk for disruptions of large volumes of oil in the region.

That’s what the Chief Commodity Analyst at Skandinaviska Enskilda Banken AB (SEB) said in a report sent to Rigzone recently. Schieldrop added, however, that “rockets and drones will likely still be flying left, right, and center in the region in 2024”.

In any case, the Chief Commodity Analyst noted in the report that the main gains in oil prices so far this year “look like they are driven more by fundamentals than by Mid-East risk premiums”. 

“Our main view is … that it is not so much the Middle East tensions, tragedy, risks, and fears of a wider war in the region which has driven oil prices higher into the new year. Rather we have argued that it is fundamentals,” he added.

In the report, Schieldrop said January data points to bullish fundamentals.

“With some data at hand for January 2024 this indeed looks to be the case. OPEC+ produced 350,000 barrels per day more than its target for January. That should have been bearish,” he added.

“But – commercial crude and product stocks fell counter seasonally in January … Flat prices moved higher: the Brent crude oil price is up $7 per barrel to date since 29 Dec-23; crude backwardation strengthened … refining margins strengthened … [and] global manufacturing increased in Jan-24,” he continued.

Schieldrop said in the report that last week was a very strong week for Brent crude “with a gain of $4.9 per barrel”.

“It closed on a strong note at $82.19 per barrel … [on February 12 morning] it is falling back 0.9 percent to $81.5 per barrel with signals from Iran’s foreign minister that a diplomatic solution for Israel-Hamas may be possible,” he added.

“While this is lowering the risk for an all-out war in the region involving Iran it is difficult to envision anything else than 2024 being a year with lots of violence and rockets and drones flying left, right, and center in the Middle East region as the hard handed destruction of Gaza continues to feed anger into the region even after the violence in Gaza has come to an end,” he continued.

A statement posted on the Islamic Republic of Iran’s Ministry of Foreign Affairs website on February 10 revealed that Iranian Foreign Minister Hossein Amirabdollahian said, “the developments in Gaza are ushering in a political solution, but Netanyahu still sees war as the solution in order to save himself”.

In a statement posted on the Israeli Ministry of Foreign Affairs site on February 7, Israel Prime Minister Benjamin Netanyahu said, “our security and the prospects of peace in the Middle East depend on one thing – total victory over Hamas”.

U.S. Central Command (Centcom) noted in a statement on its X page that, on February 12 from 3.30am to 3.45am Sanaa time, “Iranian-backed Houthi militants fired two missiles from Houthi-controlled areas of Yemen toward the Bab al-Mandeb”.

“Both missiles were launched toward MV Star Iris, a Greek-owned, Marshall Islands-flagged cargo vessel transiting the Red Sea carrying corn from Brazil. The ship reports being seaworthy with minor damage and no injuries to the crew. Of note, the MV Star Iris’s destination is Bandar Iman Khomeini, Iran,” Centcom added.

Dryad Global’s latest Maritime Security Threat Advisory (MSTA) said “Iran-backed Houthi rebels targeted a cargo ship in the Red Sea, which was reported on Monday to be transporting corn to Iran”.

“This incident is the 35th such incident where commercial vessels have been targeted since the 19th November 2023 and marks the first alleged attack by the Houthis on a ship destined for Iran, amid their campaign against international shipping in support of Palestinians during the conflict between Israel and Hamas in Gaza,” it added.

To contact the author, email andreas.exarheas@rigzone.com