Oil rises amid assessment of Middle East export strength despite tensions - Sarmad
Oil prices rose slightly on Tuesday, as security concerns in the Middle East kept geopolitical risk premiums in the market, even as strong regional crude exports and the G7’s release from emergency stocks helped ease supply worries.
Brent crude futures rose 27 cents, or 0.3 percent, to $100.59 a barrel by 0330 GMT, while U.S. West Texas Intermediate crude futures gained 30 cents, or 0.3 percent, to $89.73 a barrel.
“Shipping data show that crude exports from the region have actually exceeded pre-war levels on several days in late September. Alternative routes and logistical adjustments have, to some extent, allowed producers to maintain the flow of supplies despite disruptions around the Strait of Hormuz,” said Priyanka Sachdeva, head of market research at Phillip Nova.
“However, it does not yet seem reasonable to consider this a full return to normal supply conditions. Attacks on oil tankers in the Strait of Hormuz area have resumed, and the number of incidents has risen over recent days. This means that although oil shipments continue to flow, their transportation costs, insurance, shipping routes, and associated security risks remain elevated.”
Data showed that oil flows from the Gulf region, excluding Iran, rose to more than 81 percent of September’s pre-war levels, supported by a rebound in Saudi exports despite attacks on the kingdom’s oil infrastructure and escalating Iranian attacks on regional shipping. Meanwhile, Iranian exports fell to zero due to U.S. sanctions.
In another move to ease supply concerns, G7 countries agreed on Friday to draw down 100 million barrels of diesel and crude oil from emergency reserves, and pledged to refrain from imposing export restrictions on energy following pressure from U.S. President Donald Trump.
Nevertheless, the conflict between Saudi Arabia and Iran-backed Yemeni Houthi rebels continued to fuel fears of potential supply disruptions from the region’s largest oil exporter, amid a stalemate in U.S.-Iran talks.
The Yemeni government said its forces, backed by Saudi Arabia, made rapid progress on Monday to regain control of the coastline overlooking the Bab al-Mandab Strait up to the city of Al-Mukha, and to expel the Houthis from most areas they seized last month. In response, the Houthis said they carried out three military operations in Saudi Arabia targeting several sites, including King Khalid International Airport in Riyadh and an Aramco refinery in Rabigh. No confirmation has been issued by Saudi Arabia so far.
Vivek Dhar, an analyst at Commonwealth Bank of Australia, noted that other market factors, such as falling oil inventories, are making traders hesitant to believe that lower prices can persist.
He added that oil shipping rates from the Gulf to Asia have also risen to new record levels, underscoring ongoing pressures in the shipping market and highlighting another aspect of the oil supply chain that can barely withstand disruptions.
