Gunvor chair: Mideast conflict will not affect oil supply but demand is a concern

The CEO of trading firm Gunvor is confident that the conflict in the Middle East won't impact oil supply. He said this on Tuesday.

Torbjorn Tornqvist, in response to a question about the rising tensions of the Middle East, said: "I am very confident that it will have no impact on oil supply."

He told the Gulf Intelligence Energy Markets Forum, held in Fujairah that the situation in the Red Sea and Yemen was a nuisance but not disruptive. The market, he said, was more concerned about the weak demand.

Brent crude prices dropped by over 2% on Tuesday, to about $70. The prospect of increased supply and a tepid growth in global demand outweighed concerns regarding the escalating conflict and its impact on crude oil exports from Middle East.

Tornqvist stated that the oil market has enough spare capacity, and the outlook for demand is weak. This will reduce volatility. He added that "things are beginning to normalise".

He said the producer group OPEC+ faced a dilemma, whether to defend their market share or to take steps to support declining oil prices.

OPEC+ (Organisation of Petroleum Exporting Countries, its allies, led by Russia) is scheduled to increase output by 188,000 barrels per day by December. This will be delayed by two months.

On Oct. 2, a panel of top OPEC+ Ministers, the Joint Ministerial Monitoring Committee, will meet to assess the market. It is not expected that the policy will change.

Tornqvist stated that the growth in demand for 2025 is modest, and will not be enough to meet non-OPEC's growing supply. He added that profit margins in oil refining are also weak as new, efficient refinery capacity is coming online. He said that the demand for diesel fuel, gasoline, and jet fuel has plateaued in China, which is the world's largest oil importer. (Written by Ahmad Ghaddar, London; edited by Louise Heavens and Mark Potter).

(source: Reuters)