Oil prices fluctuate amid uncertainty over the US-Iran conflict
Oil prices fluctuated today as diplomatic efforts to resolve the conflict between the United States and Iran made no progress. Prices surged in the morning, but gains were capped by the absence of major supply disruptions.
Brent crude futures rose 92 cents, or 1.04 percent, to $89.44 a barrel, after hitting an intraday high of $89.68.
Futures for both benchmarks had risen by more than 5 percent last week following attacks on tankers operated by Abu Dhabi National Oil Company (ADNOC) in the Strait of Hormuz and a refinery belonging to Saudi Aramco.
Pernille Schieldrop, an analyst at SEB Bank, ruled out a significant price increase unless the current flow of crude oil through the Strait of Hormuz stops overnight, or if the Bab el-Mandeb Strait is closed, or both.
She added that prices are currently trading near $90, as investors balance the risks of further disruptions and supply shortages against the possibility of a settlement that would reopen the Strait of Hormuz, potentially leading to a sharp drop in oil prices.
U.S. President Donald Trump urged Americans to accept a slight rise in gasoline prices as long as the conflict continues.
Ismail Baghai, a spokesperson for Iran’s Ministry of Foreign Affairs, stated that talks with the Sultanate of Oman are still ongoing and will take time due to the complexity of the issue and the involvement of multiple actors and countries seeking to undermine the process.
Data showed that shipping traffic through the Strait of Hormuz slowed at the beginning of the week following attacks on oil tankers, while U.S.-Iran talks aimed at resolving the Middle East conflict stalled.
Data from ship-tracking firm Kpler showed that five bulk cargo ships crossed the strait on Saturday, with no vessels recorded on Sunday, compared to 31 ships at the start of last week.
According to Kpler data, the ships entering the strait on Saturday included a large empty crude oil tanker whose automatic identification system was turned off, and a large gas carrier flying the Indian flag that used the Iranian route.
The United States said it may continue its naval blockade of Iran indefinitely. Some ships may pass undetected with their transponders turned off, but numbers are far from the more than 130 vessels that used to cross the Strait of Hormuz daily before the U.S. and Israel launched a war against Iran in February.
Linda Abadi, spokesperson for Jordan’s Ministry of Energy and Mineral Resources, told the Kurdish media network Rudaw on Monday that “a joint technical team has been formed to coordinate with Jordan and Egypt on trilateral cooperation projects in the oil and gas sectors.”
The spokesperson noted that the two sides discussed developments related to the project and Iraqi trends aimed at diversifying oil export routes, as well as the current and future role of the Jordanian side in the project, and how that aligns with the terms of the previous draft framework agreement.
According to the spokesperson, the Iraqi oil export pipeline project through Jordan received Jordanian Cabinet approval for the framework agreement in April 2022, and necessary technical and field procedures were completed in coordination with the Iraqi side. However, “the matter is currently pending with the Iraqi side to approve signing the framework agreement for the Iraqi crude oil export pipeline project through Jordan.”
The project to lay an oil pipeline from Basra to Haditha in Anbar, and from there to the Jordanian port of Aqaba, is one of the steps to diversify Iraq’s oil export routes.
Regarding the project’s implementation timeline, Linda Abadi stated, “We are awaiting the directives of the new Iraqi government, based on the latest developments introduced by them regarding the project, so that the schedule can be determined precisely.”
Iraqi Oil Minister Basim Mohammed Khudhair revealed that Iraq has, for the first time since the conflict erupted in the Strait of Hormuz region, exported 2.8 million barrels through the southern ports in the Gulf, located in Basra Governorate, approximately 550 kilometers south of Iraq.
Minister Khudhair said in a statement to the state-owned “Al-Iraqiya” television channel that “Iraq managed, for the first time, to export 2.8 million barrels last Friday, thanks to considerable efforts by the Iraqi Oil Marketing Organization (SOMO).”
He added, “We currently have four tankers loading Iraqi crude oil: two from floating platforms and two from the port of Basra. The average oil exports from the beginning of the current month until now range between 1.85 million and 2 million barrels per day.”
Previously, Ali Nizar Al-Shatri, Director General of SOMO, stated on the 10th of the current month that Iraq is selling its oil shipments at $60 per barrel. It is expected that Iraqi crude oil exports through the Strait of Hormuz will generate financial returns reaching $3 billion, provided that crude oil export levels remain at a rate of 2 million barrels per day throughout the current month.
He also noted that Iraq has not received any exemption for the passage of Iraqi oil through the Strait of Hormuz and relies on the ability of companies to enter and exit the strait.
Trade sources reported on Monday that Abu Dhabi National Oil Company (ADNOC) sold no less than 14 million barrels of crude oil in the spot market to Asian refining companies at high prices in its latest tender.
This brings ADNOC’s total crude oil sales through eight tenders to more than 108 million barrels.
Sources said that Japan’s Cosmo Oil Refining purchased 2 million barrels of Daus crude at a premium of approximately $10.50 per barrel compared to Dubai prices on a delivered-at-terminal basis, and Taiwan’s Formosa Petrochemical purchased 2 million barrels of Upper Zakum crude at a premium of approximately $10 per barrel compared to the reference Dubai price for October.
South Korea’s GS Caltex purchased 2 million barrels of Daus crude at a premium of $6 per barrel compared to the standard Dubai price for October, for loading via ship-to-ship transfer off the coast of Fujairah port in the UAE.
Hyundai Oilbank purchased 1 million barrels of Upper Zakum crude on a delivered-at-terminal basis.
India’s Bharat Petroleum purchased 1 million barrels each of Upper Zakum and Daus crude, at a premium ranging between $5 and $6 per barrel compared to Dubai prices on a delivered basis, and Hindustan Petroleum purchased 1 million barrels of Daus crude.
Sources noted that Chevron purchased 2 million barrels of Umm Lulu crude for delivery to its joint oil refining project in Singapore, at a premium of $7.50 per barrel compared to the standard Dubai price on a delivered-at-terminal basis.
One trader said that ADNOC did not allocate any shipments to Chinese buyers due to the low prices offered in their bids. Companies typically do not comment on their commercial transactions.
