Morgan Stanley calculated that diesel use contributes 10% to 20% in cash costs for miners, while oil contributes from 4% to 50% to the cost of power generation, depending on a company’s or country’s fuel mix.
However, some are worried that Asian demand may slip if the U.S. dollar continues to strengthen – commodities are USD-denomianted so an appreciating dollar means oil imports become more expensive.
“A rising oil price therefore shifts the entire cost curve higher,” Morgan Stanley said.
For more information on the energy market, visit our energy category.