Navarik Market Update

June 29, 2017


Global crude prices rose this week over a drop in US production due to a temporary shutdown in the Gulf of Mexico induced by tropical storm Cindy. Fears that the recent Petya/GoldenEye ransomware could hit key producers and shippers also provided some upward pressure. However, as the malware has since been identified and fixes are being implemented, it is prudent to take stock of what effects this is likely to have without the initial hysteria.

Two key takeaways emerge. First, the only major oil & gas and marine shipping companies affected appear to be Rosneft and Maersk. Both Rosneft and Maersk’s oil business groups have said their production processes were not stopped. Any effects on Maersk appear to be limited to container terminals, and Rosneft has given no indication that its midstream activities should be disrupted. Second, speculation in the cyber-security community suggests this is a politically motivated attack disguised as ransomware, and while still a concern, this should ease worries that the malware will spread to other regions of the world to the same extent. Navarik Data has confirmed that there is no noticeable disruption to expected US production and trade flows.

As a result, this attack should not be unduly read into any change in Russian production volumes (and accordingly Russia’s participation in OPEC production cuts), and should not at the present time affect pricing considerations for US oil products. Doing so could unrealistically inflate bullish sentiment at a time when many bulls appear to have pinned their hopes on the Cindy-induced production declines being permanent rather than temporary.

Further Reading:
Maersk, June 28 2017
NPR, June 28 2017

 

Colin McCann is an Oil & Gas analyst with Navarik Corporation. The Navarik Data Products team analyzes Navarik's proprietary data sets and external sources to provide insights into the oil & gas shipping market. The resulting analysis enables physical and paper traders to see ship movements across the barrel before anyone else in the market.

To reach a Navarik Oil & Gas analyst email tradeflow@navarik.com. To reach Colin directly call 778-327-6917 or email cmccann@navarik.com.

A list of current available trade flow reports can be found here.