Weekly update – 27/11/23

What’s happening this week in Shipping, Energy, and Geopolitics? SEG’s team examines news and trends from around the world.

Key events

Shipping: Asia-N. Europe prices fell by 6% to $1,211/FEU while China – N. America air rates prices increased by 20% to $6.28/kg. Container Shipping is facing prolonged hard times due to falling volumes, oversupply, and declining rates. Long-term contracted rates continue to slide, with a 62.3% lower rate than November 2022. Major carriers reported financial losses in Q3 2023, largely due to declining rates.

Energy: Oil prices are fluctuating between gains and losses, locked between bullish events (like political tensions) and bearish events (like OPEC+ production cuts). Early Monday, WTI tested the $73 mark, while Brent was trading at $77.80.

Geopolitics: The Supreme Court ruled a contract between Canada’s First Quantum Minerals and the Panama government as unconstitutional, leading to significant protests and disruptions. This decision is a victory for environmentalists and the public, but it has led to severe economic and legal repercussions.

Important movements:

Shipping: The industry, including Maersk, warns of a “dire situation” in 2024 if rates don’t improve while carriers face pressure to push spot rates up, and some announced general rate Increases for mid-December. Long-term contracts, crucial to carriers, are at risk due to the weak market.

Energy: Oil market analysts note the public has disregarded the deeper OPEC+ cuts. The market is entering a supply-driven phase, reminiscent of the pre-Covid era, with potential “bull traps” for investors.

What to watch out for:

Shipping: As older contracts expire in early 2024, carriers will be exposed to the current weak market. There’s an expectation of lower rates in new contracts, signaling potential catastrophic financial losses for carriers in 2024.

Energy: OPEC+ decisions are crucial factors influencing oil prices. The market is shifting towards supply-driven dynamics, which could lead to unpredictable price fluctuations.

Geopolitics: The Panama mining controversy could lead to a lengthy and expensive legal battle between First Quantum Minerals and the Panamanian government. The situation may impact Panama’s economic and political landscape significantly.

Moses Philip Felous
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