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Watch: Market Movers Asia, June 17-21: Energy security cooperation in focus at G20 meet after tanker attacks

Oil markets are assessing the geopolitical situation in the Middle East after attacks on two tankers in the Gulf of Oman last week. The attacks happened near the Strait of Hormuz, a critical chokepoint through which 30% of the world's seaborne crude is shipped.

The tanker blasts and growing energy security concerns were hot topics at the G20 meeting of energy ministers in Japan over the weekend. Apart from ensuring energy security, the ministers also stressed the need for international cooperation to respond to the ship attacks.

Also at the summit, multiple agreements were signed including Japan's energy cooperation with Saudi Arabia and Australia, and between Indonesia's energy ministry and Japan's Inpex.

Still in oil, the wide backwardation in Dubai benchmark prices may continue to encourage Asian refiners and trading firms to slow down storage and unwind some of their long physical sour crude positions.

Meanwhile, in the coal markets, low-quality thermal coal prices in Indonesia rally as buyers look for spot cargoes amid flooding at the coal producing region of Kalimantan. On the other hand, Australian thermal coal prices are at three-year lows due to oversupply in the Asian markets.

View Full Transcript

This week: Agreements signed at the G20 meeting of energy ministers, Dubai crude in wide backwardation, and Indonesian coal prices rise.

But first, oil markets are assessing the geopolitical situation in the Middle East after attacks on one product and one chemical tanker in the Gulf of Oman last week.

The attacks happened near the Strait of Hormuz, a critical chokepoint through which 30% of the world's seaborne crude is shipped. The US has blamed Iran for the attacks, setting the stage for a tense OPEC meeting in Vienna later this month.

Asian economies from India to Japan rely heavily on Middle East crude supplies and Asian refiners have expressed grave concerns over the safe passage of their crude supplies.

The attacks are expected to increase freight rates for Middle East crude, including higher insurance and security costs, as ship owners exercise caution in sending their vessel to high risk areas.

So for our social media question this week: Do you think the Middle East shipping lanes will ever be safe for crude and oil product tankers? Share your thoughts with the hashtag PlattsMM.

The tanker blasts in the Middle East and growing energy security concerns were also hot topics at the G20 meeting of energy ministers in Japan over the weekend. Apart from ensuring energy security, the ministers also stressed the need for international cooperation to respond to the ship attacks. G20 members account for roughly 60% of global oil production and about 80% of global oil consumption.

The meeting also focused on energy transition and the development of hydrogen as a transportation fuel. On the sidelines of the summit, multiple agreements were also signed including Japan's energy cooperation with Saudi Arabia and Australia, and the partnership between Indonesia's energy ministry and Japanese explorer Inpex on the Abadi LNG project.

Meanwhile, the wide backwardation in Dubai benchmark prices may continue to encourage Asian refiners and trading firms to slow down storage and unwind some of their long physical sour crude positions.

The spread between first and third month Dubai crude swaps was assessed at $2 and 6 cents per barrel on May 17 in Singapore. This is the strongest backwardation since October 2013.

The Platts Market on Close assessment process has already seen heavy trading interest from Asian players to unwind their long Middle East sour crude positions.

In coal markets, low-quality Kalimantan thermal coal prices in Indonesia have rallied as buyers look for spot cargoes with immediate availability due to bad weather.

Market participants expect low calorific value thermal coal prices to increase next week if flooding continues to limit coal production in South Kalimantan.

Meanwhile, Australian thermal coal prices are trading at three-year lows as growing oversupply in the Asian market weighs on spot market prices. More tenders this week from Korean buyers will determine the direction of prices in coming weeks.

That's it for this week. Thanks for kicking of your Monday with us and have a great week ahead.