Oil Steady as Middle East Exports Rise
by Bloomberg | M. Gindis, K. Matsuyama, P. Burkhardt
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Crude prices stabilized as stronger Gulf exports competed with mounting concerns over attacks on tankers and tight global supplies.
Oil held steady as traders weighed rising exports from the Middle East against increasingly elevated risks to tankers traversing the Strait of Hormuz.
Global benchmark Brent settled near $101 a barrel, after earlier dropping as much as 3.3%, while West Texas Intermediate was little changed near $89. Heightened flows through the world’s most important energy chokepoint were referenced by several key industry players at the Energy Intelligence Forum in London on Tuesday, though many also pointed out thinning global supply buffers.
Kuwait is pumping oil about 75% of the level seen before the Iran war, while Iraq is seeking to hire additional vessels to send its cargoes through Hormuz. Saudi Arabia is pumping 5.8 million barrels a day through its vital East-West pipeline that crosses the country, Energy Minister Prince Abdulaziz bin Salman said. The moves come after Saudi Aramco cut the price of its flagship Arab Light grade for Asian buyers to a six-year low to push for market share.
About 12 million barrels a day of crude have exited the strait over the past seven to 10 days, Vitol Group Chief Executive Officer Russell Hardy said at the conference.
“Many national oil companies are committed to trying to get that oil out,” he said. “We need 10, 12, 14 million barrels to come out via the shipping route in order to keep things in balance as we go through the winter, because there aren’t any more inventories to drain in the West.”
Still, risks to shipping remain. Iran has increased the pace of attacks on tankers in the Strait of Hormuz in recent days, with the UK Maritime Trade Operations reporting nine attacks in the waterway already this month. That’s half the total amount it reported for all of September. India, meantime, condemned fresh attacks on commercial vessels in Hormuz and the Black Sea that left Indian crew members injured.
Brent remains about 60% higher this year after the US and Israel attacked Iran in February, disrupting supplies and fueling inflation. While oil flows from the Middle East have rebounded toward pre-conflict levels, product markets remain particularly constrained, in part due to Ukrainian strikes on Russia. That’s prompted the Group of Seven and partners to add to stockpile releases.
The Saudi energy minister said the kingdom was able to start using the East-West link again five to six days after the “big hit.” The pipeline was shut Sept. 10 following attacks by drones launched from Iraq. State-run Saudi Aramco had ramped up flows through the pipeline to close to 6 million barrels a day, or over 80% of capacity, a person familiar with the matter said late last week.
The heads of Aramco and Kuwait Petroleum Corp. – two of the Middle East’s biggest oil producers – warned that the rest of the world will need to share the burden of paying for the Iran war and the need for infrastructure spending that it’s creating. The conflict has led to widespread damage to oil pipelines, refineries, gas plants and dozens of tankers, racking up a bill for new investment that’s already in the tens of billions of dollars.
In Yemen, the internationally-recognized government, backed by Saudi Arabia, claimed to have regained territory from the Houthis, as fighting intensified in the region near the Bab el-Mandeb strait, a key maritime route for Saudi exports. In recent months, the Houthi escalations against Riyadh have damaged energy infrastructure and tankers.
The Houthis said they responded to overnight attacks by firing missiles and drones at the kingdom, and targeted the main airport in Riyadh.
With Yemen’s armed forces taking control of the Red Sea city of Mokha and “no new fresh attacks from Houthis or Iran of magnitude – these positives are feeding into lower prices,” said Bjarne Schieldrop, chief analyst for commodities at SEB. “What is hanging over the market though is the likelihood or risk for renewed hostilities.”
Oil Prices
- WTI for November delivery was little changed to settle at $89.44 a barrel in New York.
- Brent for December settlement edged up 0.3% to settle at $100.58 a barrel.
by Bloomberg | M. Gindis, K. Matsuyama, P. Burkhardt
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas