Today's Pickup: Oil prices crash as Libya reopens oil ports and resumes production

 (Photo: Shutterstock)

(Photo: Shutterstock)

Good day,

Oil prices crashed yesterday by 6% in the wake of Libya’s National Oil Corporation (NOC) announcing that it would resume oil shipments and restore hundreds of thousands of barrels per day. The current figures indicate that 700,000 bpd would be restored after the unexpected outage over the last few weeks. 

Nonetheless, the political situation in Libya continues to be volatile, as the recent outage was unforeseen and the continued sustenance of oil production is flushed with uncertainty.  “The lifting of force majeure at all the Libyan ports will certainly come as a relief from a supply perspective, but it remains to be seen how quickly exports can return to normal,” said Harry Tchilinguirian, head of oil strategy at BNP Paribas.

The price crash also had to do with the U.S. softening its stance on the severity with which it would treat countries who continue to buy Iranian oil. Oil price rose over the last month after the U.S. pulled out of the Iran Nuclear Deal, buoyed by the U.S. announcing that it would strive towards completely cutting down Iran’s oil exporters. The much mellower U.S. stance and the Libyan inflow could mean oil prices stay low over the next week, unless something inadvertent happens.

Did you know?

According to DAT, the national average spot van rate increased 13 cents to $2.45/mile during the week ending July 7 while the refrigerated rate gained 8 cents to $2.77/mile. The flatbed rate was unchanged compared to the previous week at $2.82/mile. As rates set records, a 32% decline in the number of available loads and an 11% drop in capacity reflected the short work week last week and exceptionally high volumes during the final week of June.

Quotable:

“If the U.S. implements this additional tax on $200 billion of imported Chinese goods, it will be difficult for China not to impose greater taxes on commodities imported from the U.S.” 

- Olivier Jakob, head of energy consultancy Petromatrix

In other news:

Reduce Prices or Expect Demand to Sink, Oil Guzzler Warns OPEC

The world’s fastest growing crude consumer has a warning for OPEC: Start reducing prices, or waning demand will mean a curb in purchases from the crude cartel. (Bloomberg)

Volvo Trucks Attacks Technician Shortage by Expanding Training Program

Volvo Trucks is combating a national diesel technician shortage by expanding training and trade school partnerships to prep shop-ready workers who can keep its trucks on the road. (Trucks)

Driverless Car Makers Want Congress to Free Them From State Oversight

As Silicon Valley and automakers attempt to steer the nation toward a future of driverless vehicles, a group of influential lawmakers remains concerned that bipartisan legislation now moving through Congress could leave consumers at risk by preventing states from demanding tighter safety regulations. (Transport Topics)

Southern ports propose new chassis pool to meet demand

Explosive industry growth is causing chassis shortages at ports, so Georgia and South Carolina will pool their resources. (Supply Chain Dive)

China moves to reopen shuttered yards

A deal has been brokered to save part of Sinopacific shipbuilding, which has some owners on the edge that China is readying to reopen a swathe of shuttered yards potentially prolonging shipping’s longstanding overcapacity issues. (Splash247)

Final Thoughts:

During my recent week-long visit to London, I spent a major chunk of my mornings and evenings stuck in traffic as vehicles clogged up the roads in endless traffic jams. That said, this is not an isolated scenario, but a common occurrence across most of the major metropolitans across the world, more so in developing and densely populated countries like China and India. 

Though there always is the option of widening roads and laying new ones as cities expand, we are heading towards a future which would not be sustainable if people choose to travel on their private vehicles instead of opting for shared transport - public or otherwise. Uber, for example, has revolutionized the concept of Mobility as a Service (MaaS), which is the need of the hour. 

Governments need to consciously push towards making its citizens look towards shared transport, and create a public transportation network that is both an affordable and comfortable choice for its people. Singapore leads the way in this aspect, with a meager 15% of its population actually owning their own vehicle, while the rest are dependant on the city-state’s impeccably sound public transportation and taxi network. The reason for this is their sky-high taxes for vehicle ownership, which forces its citizens to opt for shared transport. 

The idea of drone delivery could also significantly reduce traffic on the roads, as instant deliveries like food and light-weight products could be moved via air, rather than last-mile delivery vans that contribute sizeably to the traffic on the roads. 

Hammer down everyone!

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