Review of oil prices in 2012

• Date: 01 July 2013
• Published date: 01 July 2013
• DOI: http://doi.org/10.1111/j.1746-9066.2013.00017.x

First quarter 2012

31 December-6 January

Dated Brent Friday close: $111.57

Oil markets rose sharply at the start

of the year before settling-back.

Dated Brent was initially quoted

nearly $5/bbl higher before easing,

but still ended over $3/bbl up on the

previous week. The excitement was

caused by a war of words between

the US and Iran and by threats from

the EU to impose a ban on oil im-

ports from Iran. Iran responded by

threatening to close the Strait of

Hormuz to all oil traffic. Crude

futures in London and New York

rose to seven-month highs, pushing

Brent to $114/bbl and West Texas

Intermediate (WTI) above $100/bbl.

Product prices rose in sympathy in

most markets and prices in Europe

gained extra support from an an-

nouncement by financially-troubled

Petroplus that it was closing three of

its five refineries.

7-13 January

Friday close: $109.88

Prices eased as traders forgot about

Iran’s threat to the Persian Gulf and

switched their attention instead to

the parlous state of the world’s

economy. Sour crude prices never-

theless gained relative strength from

the notion that EU refiners might

seek to replace their Iranian imports

with other crudes well in advance of

any formal EU oil embargo. Delays

to loadings of Iraq’s Kirkuk crude at

Ceyhan added further to the relative

strength of sour crudes, notably

Urals, which also benefited from

high demand for high sulphur heavy

fuel oil. Middle distillate gained on

good demand. In Asia, demand

from olefin crackers boosted naph-

tha values.

14-20 January

Friday close: $108.29

North Sea Dated fell by more than

$3/bbl before recovering. WTI

gained around $1/bbl. In Asia,

heavy sweet crudes rose sharply in

relation to North Sea Dated. There

appeared to be little underlying

strength in most markets, however.

WTI’s gain was largely the result of

weekly US data showing a stock-

draw in the Mid-Continent. Urals

continued to benefit from the pro-

spect of higher demand in the event

of an EU oil trade embargo on Iran,

as well as from good fuel oil de-

mand in Asia, where naphtha also

continued to rise. Warm weather in

Europe caused heating oil prices to

ease.

21-27 January

Friday close: $110.38

Markets generally lacked clear di-

rection. Crude oil prices rose in

renewed though unspecified fears

about Iranian intentions in the Gulf,

then fell on news that the Interna-

tional Monetary Fund had lowered

its growth forecast for the world

economy. The EU finally got

around to agreeing a proposal to ban

oil imports from Iran, fixing 1st July

2012 as the starting date. South

Sudan announced that it was to shut

down its oil production following a

decision by North Sudan to charge

over $32/bbl for oil exported from

its Red Sea terminal. The net result

of these events was a small gain in

crude prices. Product prices gained

on reduced refinery runs in Europe

and the US.

28 January-3 February

Friday close: $112.21

A bullish tone returned to the inter-

national crude market as traders

continued to fret about what Iran

might or might not do in the Persian

Gulf. These fears had little effect on

US domestic crude, however, where

the principal concern was the grow-

ing oversupply of both domestic and

Canadian crude in the Mid-

Continent. North Sea and African

prices were supported by strong

Asian buying. Cold weather in Eu-

rope and East Asia was accompa-

nied by a rise in middle distillate

prices. The loss of production from

three Petroplus refineries provided

further support for products in Eu-

rope, especially for gasoline, which

also rose in the US on news of refin-

ery problems in Texas.

4-10 February

Friday close: $118.11

North Sea Dated posted gains of

over $7/bbl and WTI was up by

$3.50/bbl as cold weather across the

Northern Hemisphere boosted mid-

dle distillate and fuel oil prices.

Crude supplies were also hit by a

shutdown of part of the Forties Sys-

tem in the North Sea and storms in

the Black Sea, which delayed ex-

ports of Urals crude. Heavy, sweet

crudes gained in Asia as China

sought to replace supplies lost from

South Sudan. Vietnam’s Bach Ho

crude was quoted around $130/bbl.

Japanese utilities sought increased

supplies of heavy, sweet crude and

low sulphur waxy residue for use in

power stations.

11-17 February

Friday close: $120.30

Sour crudes continued to benefit

from tensions in the Persian Gulf

and fears of an interruption in sup-

plies. North Sea grades meanwhile

strengthened as production problems

in the Forties System restricted sup-

plies of sweet crudes. In Asia, the

heavier sweets rose on increased

demand from China and Japan.

China sought additional barrels to

replace lost supplies from South

Sudan and Japanese utilities were

once again heavy buyers of heavy,

sweet crudes for direct burning in

power stations. A drop in Canadian

exports boosted the price of US

crudes, helping WTI back above the

$100 mark. The rise in crude oil

prices appeared to lift most prod-

ucts, but heavy fuel oil prices eased

on ample supplies. Gasoline was

firm in the US and Asia as shortages

were reported in some areas.

18-24 February

Friday close: $124.98

Concerns about Iran yet again drove

markets upwards. This time, it was

an announcement by Tehran that it

REVIEW OF OIL PRICES 2012

Oil and Energy Trends: Annual Statistical Review

© John Wiley & Sons Ltd 2013

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