Oil Rises Amid Ongoing Concerns Over Middle East Supplies - Sarmad
Oil prices rose on Thursday, amid ongoing concerns about Middle East supply disruptions as attacks on shipping in the Gulf and the Strait of Hormuz intensified.
Brent crude futures rose $1.33, or 1.33 percent, to $101.53 a barrel by 0116 GMT. U.S. West Texas Intermediate (WTI) crude futures gained $1.11, or 1.26 percent, to $89.39 a barrel.
Prices fell at settlement on Wednesday after the International Energy Agency (IEA) agreed to accelerate draws from oil stockpiles and prioritize diesel supplies under a plan launched in March, as governments seek to address record fuel price crises and supply disruptions stemming from the Iran war.
Threats to oil shipments in the Gulf and the Strait of Hormuz, through which cargo equivalent to about 20 percent of global oil and fuel flowed before the war, escalated in October as the U.S.-Israeli conflict with Iran entered its eighth month.
Attacks on oil tankers transiting the Strait of Hormuz reached their highest weekly level since the start of the Iran war last week. The surge in attacks comes as more crude oil flows from the Gulf, albeit at higher costs and with greater risks to shipments and ship crews.
In the latest incident, the UK Maritime Trade Operations agency reported on Wednesday that a tanker north of Qatar was hit by several projectiles, causing injuries.
Daniel Hynes, senior commodities analyst at ANZ, said in a note on Thursday, “In the past, such attacks have led to reduced shipments from the Persian Gulf. But this time, producers appear willing to accept the risk of damage to their vessels, as there is no alternative way to transport their oil to international markets.”
Hynes added that the IEA’s drawdown would likely consist of barrels that were already part of the agency’s original 400-million-barrel drawdown plan when the Middle East conflict erupted, suggesting it does not appear to represent an additional draw from strategic reserves.
He noted, “Ultimately, drawing from strategic reserves may temporarily increase supply flows, but it does not create new production capacity.”
U.S. inventory data, from the world’s largest oil consumer and producer, supported prices, as crude oil stocks fell more than expected while diesel inventories declined slightly.
The U.S. Energy Information Administration said on Wednesday that crude oil stocks fell by 3.2 million barrels to 424.1 million barrels in the week ending October 2, compared with analysts’ expectations in a Reuters poll for a drop of 1.7 million barrels.
Distillate product inventories, including diesel and jet fuel, fell by 42,000 barrels to 105.14 million barrels, well below levels recorded at this time of year over the past five years.
