Oil Extends Gains on Hormuz Uncertainty

by Bloomberg | C. Gorrivan, P. Burkhardt, M. Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas

Oil climbed for a fourth session as traders remained skeptical that a deal would quickly restore Hormuz flows.

Oil edged up in a choppy session as traders expressed skepticism over the potential for a deal that would imminently restore flows through the Strait of Hormuz, even as officials tout progress.

West Texas Intermediate rose 1.3% to settle near $83 a barrel, marking a fourth straight session of gains. Futures have been highly sensitive to headlines about negotiations between the US and Iran to reopen the vital energy chokepoint. Prices had surged after US President Donald Trump made sweeping new demands on Tehran, clouding the outlook for any agreement.

Pakistan’s defense minister said Tuesday that the US and Iran are “close to some sort of arrangement” on the strait. Talks between Oman and Iran, the two countries with coastal waters, have also reached an advanced stage, Al Jazeera reported, citing a Qatari foreign ministry spokesperson.

Restoring shipping through the world’s most important energy chokepoint is crucial to rebalancing the global oil market. Before the war, the route handled about a fifth of global oil and gas flows. The US now expects oil supply disruptions to reach about 600,000 barrels per day through the end of next year, according the US Energy Information Administration’s Short-Term Energy Outlook.

“The market saw some profit taking as Pakistan came out with more optimistic rhetoric that may imply that at least some communication is taking place between Iran and the US,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management in Copenhagen. “Many traders work with close stops, making profit taking tempting after the run up in prices this week.”

Crude has been whipsawed since the war broke out at the end of February, with fuel prices rallying even harder as the situation deteriorated again in recent days. Diesel has been particularly impacted as the Russia-Ukraine war also squeezes supplies, and benchmark prices in Europe have more than doubled this year.

Still, skirmishes across the region kept traders on edge. A Navy helicopter fired “two hellfire missiles” at a Panama-flagged cargo vessel that was attempting to transit the Gulf of Oman, the US Central Command said in a social media post. A refinery in Libya was also attacked on Monday.

The Middle East conflict has also spread to the Red Sea, where Iran-backed Houthi militants are threatening a shipping route that has become a lifeline for Saudi Arabia since the Iran war choked off exports from the Persian Gulf. Saudi Aramco has pushed back restarting its Jazan refinery to late August, following an attack claimed by the rebel group.

In Russia, a fire was reported on Tuesday at Rosneft’s Komsomolsk oil refinery in the Khabarovsk region, though the company said operations weren’t halted. Drone debris caused a fire at an industrial facility in Russia’s Orenburg region, where ForteInvest’s Orsk refinery is located, according to a local statement.

Oil Prices

• WTI for September delivery was up 1.3% to settle at $83.20 a barrel in New York.
• Brent for October settlement was 1.4% higher to trade at $88.91 a barrel.

by Bloomberg | C. Gorrivan, P. Burkhardt, M. Gindis
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas