Oil Soars as Hormuz Risks Rattle Markets
by Bloomberg | Staff
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*this article was not written by Roseland Oil & Gas
Brent oil spiked over $107 a barrel, the highest in nearly four months, as deteriorating conditions in the Middle East heightened concerns over global supplies.
The global benchmark ended Thursday’s session up more than 6%, after surging above $108 a barrel at one point before paring. West Texas Intermediate futures closed above $102 for the first time since May. Traders have been rattled by an uptick in shipping attacks around the Strait of Hormuz, the critical waterway that’s become the focal point of the conflict. Meanwhile, both the US and Iran are bracing for a long war, fanning renewed fears of energy-driven inflation as prices for natural gas and diesel also surge.
Iran signaled it has no intention of backing down in the face of an American naval blockade and will escalate its strikes if the US continues attacking its territory. Meanwhile, Tehran-backed Houthis in Yemen are targeting Saudi Arabian assets, with the kingdom warning its crude production plunged last month to the lowest since 1990.
“Crude is trading at its highest levels since May as the market reprices both the escalation and, increasingly, the duration of geopolitical risk,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “As prices push into levels where options dealers have meaningful short-gamma exposure, that positioning is adding fuel to the move higher this morning.”
Across other technical measures, trend-following commodity trading advisers flipped to 100% maximum long on Thursday in Brent, suggesting they’ve exhausted buying capacity for this session, according to Kpler. Robot traders positioned in West Texas Intermediate futures are currently 91% long, the firm added.
In the latest Mideast development, Houthi gained ground in their attempt to seize Mokha, a key port city on the Red Sea, better positioning the group to menace shipping in the Bab-el-Mandeb Strait.
Brent is up more than 75% this year, although the benchmark remains well below its wartime peak of $126 a barrel reached in April, in part due to some crude flowing out of the Persian Gulf.
Still, gains have accelerated across the oil market in recent days. The Dated Brent physical market benchmark was priced at $120 a barrel on Thursday, as fresh buying from Asia tightens supplies.
Those purchases are coming as drivers are paying more to fill up, with retail diesel prices in the US nearing an unprecedented $6 a gallon and European gasoil futures approaching $200 a barrel. US diesel futures surged above $5 a gallon for the first time since April 2022 on Thursday, while gasoline prices at the pump hit a Labor Day record this week.
For now, US diesel inventories are projected to fall this month to their lowest in more than two decades, according to the Energy Information Administration. Weekly data from the agency showed that distillate stockpiles rose 2.1 million, though supplies still held at lowest seasonal level ever. Gasoline inventories also rose. The fuel increase offers some reassurance over near-term tightness, but the broader outlook remains bleak.
The rising price of gasoline and diesel in the US has become a political liability for Republicans ahead of the midterm elections in November, and President Donald Trump, who launched the war on Iran with Israel in late February, said that gas prices won’t fall before the vote.
“Rising oil prices will be a concern ahead of the midterms,” said Warren Patterson, head of commodities strategy at ING Groep NV. “In order to see prices moving significantly higher, we would need to see recent escalation feeding through to renewed disruptions in oil flows through the Strait of Hormuz.”
Brent surged more than 6% to $107.63 as escalating Middle East tensions heightened global supply concerns.Oil Prices
- Brent for November settlement climbed 6.3% to settle at $107.63 a barrel in New York.
- WTI for October delivery rose 6.7% to settle at $102.48 a barrel.
A resurgence in Chinese buying has helped to tighten the global oil market, although the country’s smaller refiners are being squeezed by higher prices and may be forced to cut processing runs in the coming weeks, potentially curbing demand in the world’s biggest crude importer.
by Bloomberg | Staff
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas