We cannot live without oil. Many items in our lives are derived from petroleum, such as raw materials, hospital supplies, industrial raw materials, and agricultural raw materials. Currently, due to the price increases caused by the war, the most obvious impact is the rapid rise in the price of raw materials, with prices changing three times a day. Today, futures prices rose and trading was halted.
How does this affect our tape manufacturing industry?
On the demand side: Supply disruptions have led to regional shortages and panic buying. Asia, as a major buyer of Middle Eastern crude oil, is most severely affected: China faces a supply risk of up to 4 million barrels per day and has ordered its state-owned oil companies to stop signing new clean oil export contracts and is attempting to cancel already sold goods to prioritize domestic supply and address potential refinery shutdowns. India received a temporary exemption from the United States, allowing it to increase imports of Russian crude oil as an alternative. Japan, South Korea, and Taiwan import 60% to 75% of their crude oil via the Strait of Hormuz and will be forced to deplete their inventories in the short term. Europe is heavily reliant on Middle Eastern refined products, with 40% of its aviation fuel imports (approximately 290,000 barrels per day) and 10% of its diesel demand coming from the region. Supply disruptions have led to record highs in European jet fuel crack spreads. The refined petroleum product market is facing a severe crisis: global jet kerosene/diesel crack spreads have generally risen by $20-30 per barrel, with Singapore jet kerosene crack spreads breaking through a record high of $117 per barrel. The Asia-Pacific region, which imports 60% of its naphtha from the Middle East, is currently facing severe shortages, with crack spreads surging to their highest level in four years. High freight rates (VLCC freight rates on the Americas-Asia route reaching $14.19 per barrel) and record demurrage fees (some demurrage fees reaching $310,000 per day) have further suppressed inter-regional arbitrage and exacerbated regional supply tensions.
Politically, following the death of former Iranian President Khamenei, the Iranian regime has not yet been overthrown, and his second son, Mojtaba Khamenei, was elected as the new president. Iran's military strength remains robust. Cautious navigation in the Strait of Hormuz has impacted the actual supply chain, and short-term geopolitical premiums cannot be ignored. International crude oil prices still have upward potential, and volatility may continue to rise in the short term.
Potential downside risks stem primarily from two sources: negative feedback from the macroeconomy and a significant easing of tensions between the US and Iran.
We all hate war, but each of us is insignificant. What can we do? We can only pray for these events to be introduced as soon as possible, and for world peace.
