Oil prices has had a great impact on the logistics and transportation industry

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The recent decline in oil prices has had a great impact on the logistics and transportation industry, including ocean freight, air freight. Diesel is the primary source of fuel for Class 8 trucks, also known as tractor trailers. It accounts for 15%-25% of a driver’s total cost of operation to move a shipment of goods.

On the supply side, recently, geopolitics has led to changes in the oil trade pattern. The actual production increase of OPEC+ members is not as good as planned. The US crude oil production has increased, but the follow-up companies are not willing to increase production, and the release of strategic reserves is unsustainable. On the demand side, short-term Looking at it, the summer travel peak and the recovery of China’s post-epidemic economy may provide some support for crude oil demand, and the pressure on the global supply chain continues to fall, which may boost crude oil demand. However, repeated epidemics and geopolitics still have great uncertainties. In the medium and long term, the tightening of global liquidity will accelerate, or the downward pressure on the economy will increase, resulting in a decrease in demand for crude oil. In addition, the outbreak of the Russia-Ukraine conflict has accelerated the pace of global energy green and low-carbon transformation, and the demand for crude oil has tended to decline in the long run. It is expected that crude oil prices will remain volatile in the short term under the tight balance between supply and demand, and will show a trend of gradual decline in the medium term.

The linkage and transmission of oil price, economic cycle and international trade. Since 2004, international oil prices have mainly experienced five cycles, namely 2004-2009, 2009-2016, 2016-2019, 2019-2020, and 2020-present. When the international oil price is mainly driven by demand, the oil price and economic growth will basically move in the same direction; if the oil price is mainly driven by supply factors, the oil price and economic growth may move in the opposite direction, or fluctuate less in some stages. In terms of trade, fluctuations in international oil prices will have an impact on international trade transportation costs, especially shipping costs. It will also have a huge impact on air freight and road transport.

Oil prices affect the upstream, midstream and downstream industries, and the transmission effect gradually weakens. Crude oil is closely related to many industries in economic production activities, and its price fluctuations will also have an impact on the costs and profits of related industries. Overall, fluctuations in international crude oil prices have an impact on upstream, midstream, and downstream industries, and have a greater impact on industries such as oil exploration, oil processing, and logistics transportation. At the same time, they also have a certain effect on the pace of energy transformation. Upstream, in terms of crude oil extraction, changes in crude oil production are basically in line with the logic of companies expanding production when oil prices rise and companies reducing production when oil prices fall. The growth rate of industry added value will be positively correlated with international oil prices after 2019; midstream, when international oil prices are between 40-80 When the oil price exceeds US$/barrel, the profits of oil processing companies usually rise and fall with oil prices, but after exceeding US$80/barrel, corporate profits will be impacted, and the growth of crude oil processing volume will be greatly suppressed. The transportation industry has a certain impact; downstream, if the follow-up international oil price continues to fluctuate at a high level, it will continue to benefit the consumption of new energy vehicles. If the international oil price falls in the medium term, the sales of fuel vehicles may rebound slightly in the short term, but the consumption of new energy vehicles is a long-term trend.

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