Oil Holds Above $90 as Fighting Flares
by Bloomberg | M. Gindis, C. Gorrivan, G. Smith
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil held near a five-week high as renewed US-Iran fighting raised fresh concerns over Strait of Hormuz exports.
Oil steadied near the highest closing level in five weeks as fighting again raged between the US and Iran, renewing the threat to energy exports from the Middle East.
West Texas Intermediate edged up marginally to settle above $90 a barrel, notching a three-session winning streak, while Brent ended the day over $95 for the first time since late July. The US conducted another round of strikes on the Islamic Republic overnight, with President Donald Trump threatening more attacks if Tehran responded. Within hours, Iran retaliated against Jordan, Bahrain and Kuwait, countries that host American forces.
The return to a hot war has once again put shipping through the vital Strait of Hormuz in jeopardy. The US struck two Iranian vessels Tuesday under a new “tanker-for-tanker” policy approved by Trump, Axios reported, citing American officials. About a day earlier, two oil supertankers attempting to exit the strait were reported to have been hit by projectiles.
“The market is now clearly pricing in a direct military confrontation, while the prospect of a negotiated solution has diminished,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management in Copenhagen. “This is a worse combination for the energy market than the situation we faced just a few days ago and even in April. Today, inventories are even more depleted.”
The strikes follow weeks of relative calm, during which the US had said it was pivoting from military action to economic pressure on Tehran. Crude prices eked out a marginal gain last month and remain about 30% higher since the war began in late February. Refined products such as diesel have rallied even harder due to the Middle East conflict and ongoing war between Russia and Ukraine.
That pain was reflected in the US on Wednesday. Weekly data from the Energy Information Administration showed that crude refinery runs soared to the highest in seven years, while gasoline imports fell to 370,000 barrels a day last week, below levels for the same time in 2020. In the Midwest, refineries are operating at an unprecedented 103.5% of capacity to capitalize on surging margins.
The escalating risks to shipping imperil supplies of oil, refined products, gas and other commodities, adding to inflationary pressures on central bankers. Meanwhile, the buffer provided by strategic petroleum reserves has thinned because governments have already drawn on stockpiles during months of disruption.
US Treasury Secretary Scott Bessent said 17 million barrels of crude exited Hormuz on Monday and that the Islamic Republic doesn’t have control of the strait.
Later, US Energy Secretary Chris Wright reiterated that figure and added that exports are averaging about 8 million barrels a day. An additional 4 million to 5 million barrels a day are bypassing the waterway via pipelines, he told reporters while en route to Venezuela.
Chevron Corp. Chief Executive Officer Mike Wirth said in a Bloomberg television interview that global oil supply and demand are returning to “balance” due to increased supplies from the Strait of Hormuz in recent weeks, but risks remain.
The Islamic Revolutionary Guard Corps said Tuesday the renewed fighting had “only tightened the lock” on Hormuz.
Oil Prices
- WTI for October delivery gained 0.9% to settle at $91.01 a barrel in New York
- Brent for November settlement rose 1% to settle at $95.63 a barrel
“The conflict seems stuck in a phase where the tussles for control of Hormuz bring recurring hostilities, which nourishes the risk premium embedded in oil prices,” said Norbert Ruecker, head of economics at Julius Baer Group Ltd.
by Bloomberg | M. Gindis, C. Gorrivan, G. Smith
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas