Commodity Tracker: 5 charts to watch this week

S&P Global Commodity Insights editors are keeping a close eye on oil prices after a number of OPEC+ countries announced to extend their voluntary production cuts and ahead of key meetings in April and June. Meanwhile, Iranian crude production has been higher than it has been in years. Freight rates are also in focus following the sinking of a bulk carrier in the Red Sea.

1. OPEC+ continues to cut, despite optimism on demand growth

What's happening? Several OPEC+ countries said March 3 that they are extending their voluntary production cuts(opens in a new tab) until the end of June, despite OPEC continuing to see demand for its crude rising until the end of the year. Russia will lower crude output(opens in a new tab) by 350,000 b/d and exports by 121,000 b/d in April; 400,000 b/d in production and 71,000 b/d in exports in May; and 471,000 b/d from production in June. This will bring Russia and Saudi Arabia's quotas in line at 8.98 million b/d. Spot crude prices fell despite the announcement to extend output cuts. Platts assessed Dated Brent at $86.27/b on March 4, down from $87.50/b on March 1. Platts is part of S&P Global Commodity Insights.

What's next? The group failed to deliver on its cuts in January, according to estimates from the Platts OPEC+ survey(opens in a new tab) by S&P Global. Two countries that did not comply in January are Iraq and Kazakhstan(opens in a new tab). They have indicated that they may implement compensation cuts. Compliance has frequently been a contentious issue in OPEC+ negotiations and will be examined in detail at the group's next meetings. The nine-country Joint Ministerial Monitoring Committee overseeing the OPEC+ agreement is scheduled to meet on April 3. A full ministerial meeting is set for June 1 in Vienna.

2. Freight rates on notice after Rubymar sinks in Red Sea

What's happening? The Belize-flagged, UK-owned Rubymar bulk carrier sank(opens in a new tab) on March 2, 13 days after being severely damaged by a Houthi missile from Yemen and becoming the first vessel lost since attacks on Red Sea ships started in November. The ship is just below water, and other shippers in the area may not see it as they pass by, raising the risk of accidents. Many commercial shippers have diverted their voyages to the longer route around the southern tip of Africa, and insurance companies stopped offering hull and machinery coverage for ship owners choosing to take the shorter Red Sea route.

What's next? Houthi attacks on vessels in and around the Red Sea had supported shipping rates, until recently. Platts assessed the Dirty Arab Gulf to Europe voyage to move 140,000 mt of crude was $27.40/mt on March 4, after climbing to $33.61/mt on Feb. 1, the highest since April 2020. Traders have been more optimistic on higher freight rates in March, driven by the emergence of more cargoes seeking VLCCs for the Persian Gulf to East route.

3. US plant-based protein exports fell to decade-low in 2023

What's happening? The US exported a total of 100,627 mt of protein concentrates and textured protein(opens in a new tab) substances in 2023, down 12% year on year and the lowest since 2011, according to data from S&P Global Market Intelligence's Global Trade Atlas. As for peptones and derivatives, the US exported a total of 60,775 mt in 2023, down 23% year on year and the lowest point since 2010. The decline in plant-based protein exports is in line with weak plant-based meat demand in the US.

What's next? While inflation and recession worries will likely continue to hamper demands of more expensive plant-based foods in the US, the rise in flexitarian diet as well as significant government investment across Europe are expected to drive market growth in the region. Emerging economies in Asia-Pacific and Latin America are also expected to see significant growth due to rising incomes and health awareness.

4. Iranian output remains high amid measured US oil sanction enforcement

What's happening? Despite US sanctions, Iranian crude production(opens in a new tab) is higher than it has been in years, exceeding 3 million b/d since August 2023, according to S&P Global data. Witnesses at a recent Senate Foreign Relations Committee hearing said the US should tighten enforcement of sanctions on Iran's trade with China, Tehran's largest customer for oil.

What's next? Some US lawmakers are considering legislation to require tighter enforcement of sanctions, arguing that revenues from Iran's oil trade are funding Hamas, Hezbollah, and the Houthi rebels and sowing conflict in the region. While the US has targeted Iran's oil sales in some recent sanctions, experts say the Biden Administration is likely to continue taking a measured approach to avoid escalating tensions in the Middle East and to keep the door open for renewed nuclear negotiations in 2025. Witnesses at a recent Senate Foreign Relations Committee hearing said the US should tighten enforcement of sanctions on Iran's trade with China, Tehran's largest customer for oil.

5. Bio-bunker demand set to rise and prices remain high

What's happening? Bio-bunkers, which can be used on a drop-in basis with little required modification to existing propulsion systems and supply infrastructure, have emerged to become the most popular options for shipowners with conventional vessels to meet regulatory requirements. The B24 grade in Singapore and B30 in Amsterdam-Rotterdam-Antwerp are the preferred choices for refueling shipping companies there, but B100 is also gaining ground, according to Martin Grünwaldt, vice president and head of bunkers at tanker operator Hafnia.

What's next? The EU will start capping greenhouse gas emissions intensity of marine energy in trades related to the bloc via FuelEu Maritime from 2025, while the International Maritime Organization plans to introduce similar rules on a global scale from 2027. The regulatory drive is expected to further boost bio-bunker demand. As their prices are expected to remain high, some ship operators may consider joint purchases to gain bargaining power.

Research and analysis by Rosemary Griffin, Claudia Carpenter, Eugene Ong, Kate Winston, Max Lin