Crude oil prices have found some stability around the $70per barrel mark, with markets having to digest key factors over recent weeks that have negatively impacted oil prices and seen them fall from their previous highs around $85 a barrel.

We’ve seen the release of strategic reserves by the US and then the uncertainty brought about by the emergence of the Omicron variant, which have combined to weaken the immediate oil price outlook.

As a result, all eyes were on OPEC+ in terms of whether they would maintain their commitment to increasing crude supplies, which they have agreed to do – at least for now. OPEC+ has agreed to a further 400kbbl/day production rate increase during January 2022. To some degree, I think this was also about OPEC+ not wanting to look fazed by recent adverse market developments.

The industry is still digesting the impact that Omicron will have on the critical demand-supply balance in the oil market, and because we still don’t yet have clarity, markets have probably factored in a worst-case scenario of up to 2 million barrels a day in lost demand in early 2022. One must also remember that oil had performed strongly in price terms over the past 18 months, and many traders would have been sitting on large profit positions, so some will have taken money off the table amid the uncertainty.


Related to the discussion around energy is the looming crisis with respect to urea, which is a fuel component that many would not have given much thought to until now. In Australia, we are on the brink of a major crisis that could impact deliveries at the busiest time of the calendar year, with major sectors vulnerable including agriculture, power generation, the trades, healthcare and everyday consumers.

The world is currently facing a major shortage of urea, a key ingredient found in diesel exhaust fluid (DEF) – also known as AdBlue – and a large component in fertiliser. A major factor in the supply disruption is the fact China – which previously supplied 80 per cent of Australia’s urea supplies– has recently banned the export of the product, in order to lower fertiliser prices domestically. That has left nations such as South Korea in the lurch, and now Australia is facing the same threat, with the shortage set to come to ahead by February at the latest – although the impacts could be felt sooner than that.

The urea shortage is such a significant problem because AdBlue is injected into the exhaust systems of modern diesel vehicles in order to reduce emissions, which is a mandatory requirement for trucks, private vehicles and tractors. As a result, without urgent action there’s the possibility that tens of thousands of vehicles could be pulled off Australian roads within weeks – a move that would cause supply chain havoc during the busy holiday period.

While we do create some urea locally, it’s not enough to address the shortage – and to make matters even worse, one of our biggest fertiliser producers, Incitec Pivot, is set to close one of its plants next year. Last month, Incitec Pivot announced it would cease manufacturing at its Brisbane-based Gibson Island plant at the end of December 2022.

The facility converts gas into fertiliser products, and can manufacture 280,000 tonnes of urea per year, as well as hundreds of thousands of tonnes of ammonia and ammonium and thousands of tonnes of AdBlue.The decision was made after exhaustive efforts were unable to secure an affordable long-term gas supply from Australian gas producers, which meant the facility will close after 50 years of continuous production.


The world’s best-performing industrial metal this year is tin. Prices have nearly doubled from a year ago, and are on course for their biggest annual rise in over 30 years. Tin has recently moved past the $40,000 a tonne level for the first time ever, while in China, the world’s biggest refined tin market, prices are up around 100% on the Shanghai Futures Exchange this year.

LME tin inventories had fallen to their lowest since 1989 at the start of November, and are currently not far above 1,000 tonnes. Supply has been impacted by lower exports from Myanmar and Indonesia, while at the same time white goods and electronics demand has increased.

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