Oil rebounds sharply amid rising tensions after attack in Iraq

The price of a barrel of Kuwaiti crude oil fell by $4.49 to reach $83.07 per barrel in trading yesterday, compared to $87.56 in Monday’s trading, according to the price announced by the Kuwait Petroleum Corporation.

In global markets, oil prices rose by more than 3 percent today, driven by escalating tensions in the Middle East following US and Saudi strikes in Iraq and the interception of an Iranian missile attack on US forces, while US crude oil inventories declined.

Giovanni Stonifuo, an analyst at UBS, said, “The resumption of military strikes in the Middle East and Iranian officials’ stated desire to control navigation through the Strait of Hormuz amid declining oil flows through it are pushing oil prices higher again.”

The United States and Saudi Arabia launched strikes today against Iran-backed groups in Iraq, holding those groups responsible for carrying out drone attacks on oil facilities in Saudi Arabia.

These strikes came hours after the US military announced it had thwarted a surprise Iranian attack on US forces in the region.

Meanwhile, a senior Iranian official told Reuters that Tehran rejected an Omani proposal for a joint regional management of the Strait of Hormuz, dampening hopes of ending a months-long crisis that has disrupted trade in the Gulf.

Only a small number of bulk carrier ships transited the Strait of Hormuz this week. Five ships transited the Bab el-Mandeb Strait today, which serves as an alternative route for Saudi oil shipments bound for Asia, compared to 39 ships on Tuesday.

That was the highest number since the 19th, prior to the announcement by Iran-aligned Houthis of a naval blockade against Saudi Arabia.

Sources told Reuters on Tuesday, citing data from the American Petroleum Institute, that US crude oil inventories fell by approximately 3.3 million barrels in the week ending on the 24th.

Sources told Reuters that the OPEC+ alliance is likely to halt oil production increases for three months starting in October, after it had previously eliminated a voluntary production cut segment it had imposed to support prices.

Commercial sources said today that Abu Dhabi National Oil Company (ADNOC) sold at least 12 million barrels of crude oil in the spot market to Asian refineries and trading companies at premiums in its latest tender, as renewed combat between the US and Iran disrupted supplies and triggered a wave of buying.

Oil flows through the Strait of Hormuz have dropped sharply since fighting intensified between the US and Iran earlier this month. ADNOC has been using a fleet of tankers to secretly transport crude oil from the Gulf to other tankers in the Gulf of Oman, but exports have slowed this month.

Indian Oil Corporation purchased 2 million barrels of Upper Zakum crude for loading in late August at a fixed price or a premium of $1 over Dubai prices for August on a delivery basis.

Sources said major Chinese companies—Yunipex, the trading arm of Sinopec, PetroChina, and Sinochem—each purchased 2 million barrels of Upper Zakum crude at a premium of $3 to $4 per barrel over Dubai prices for September. The shipments will be delivered in September and October.

Japanese refiner Idemitsu Kosan purchased 2 million barrels of Das crude at a premium of approximately $1 per barrel over Dubai prices for September, on a FOB (Free On Board) basis. Companies typically refrain from commenting on deals.

This was the seventh tender offered by the UAE-based company since the beginning of June. According to a tender document, ADNOC offered cargoes of Murban, Upper Zakum, Umm Lulu, and Das for loading between August and October.