Crude oil prices extended their climb today and are set for a sharp weekly gain as the war in the Middle East continues with little chance of peace.
At the time of writing, Brent crude was trading at $95.55 per barrel, and West Texas Intermediate was changing hands for $91.53 per barrel, as Iran and the United States traded missile strikes this week and Israel’s defense minister threatened “crippling” Iran’s infrastructure, both military and civilian, including energy facilities.
“The market is entering a delicate adaptation phase. Elevated inventories helped absorb the initial supply crisis, but the challenge is now to keep the market balanced as those buffers diminish,” ANZ analysts said in a note as quoted by Reuters.
“Escalation is propping up crude, but the rally may lose traction if Hormuz shipments keep moving smoothly,” ING’s commodity team wrote in a note earlier today, citing reports of higher Iraqi oil exports. These, per the reports, stood at an average of 2.35 million barrels daily in August, of which almost all was exported via the southern routes, Warren Patterson and Ewa Manthey wrote. The increase is seen extending into this month on Iran’s permission for vessels carrying Iraqi crude to pass through Hormuz.
The ING analysts also noted Saudi Arabia’s decision to leave the price for its flagship Arab Light unchanged for October loadings, which would suggest supply constraints are easing. This is not, however, the case in fuels, where supply remains uncomfortably tight.
Meanwhile, U.S. Vice President JD Vance said Washington does not plan to hold peace talks with Iran until it stops attacking ships in the Strait of Hormuz, which adds to upward pressure on oil prices, seeing as Iran signals determination to stick to its hard line in response to the latest U.S. strikes, one of which resulted in civilian deaths.
By Irina Slav for Oilprice.com
