Oil prices rose on Thursday, driven by persistent concerns about supplies from the Middle East region, as attacks on shipping in the Gulf and Strait of Hormuz escalate. Brent crude futures increased by $1.33, or 1.33%, to $101.53 per barrel, while US West Texas Intermediate crude futures rose by $1.11, or 1.26%, to $89.39 per barrel.
The price increase comes after a decline on Wednesday, when the International Energy Agency agreed to accelerate oil stock releases and prioritize diesel supplies as part of a plan launched in March. This move aimed to address record-high fuel prices and supply disruptions caused by the conflict with Iran. However, threats to oil shipments in the Gulf and Strait of Hormuz have intensified, with the conflict entering its eighth month.
The Strait of Hormuz, a critical waterway for oil exports, saw a significant increase in attacks on oil tankers last week, the highest since the conflict with Iran began. This escalation coincides with increased oil exports from Gulf producers. Despite the heightened risks, larger quantities of crude are flowing out of the Gulf, albeit at higher costs and risks for shipments and crew.
A recent attack on a Qatari oil tanker resulted in casualties, according to the UK Maritime Trade Operations agency. The incident involved multiple projectiles targeting the vessel. Daniel Haines, a senior commodities strategist at ANZ Bank, noted that past attacks led to reduced shipments from the Arabian Gulf, but this time, producers seem willing to accept the risks, as there are no alternative means to transport their oil to international markets.
Haines added that the release of oil from the International Energy Agency's strategic reserves might include barrels already part of the agency's original plan to release 400 million barrels at the start of the Middle East conflict. This means it may not represent an additional drawdown of strategic reserves. He emphasized that while releasing strategic reserves can temporarily boost supplies, it does not provide new production capacity.
US inventory data, released on Wednesday, provided support for crude prices, as oil stockpiles declined more than expected. The Energy Information Administration reported that crude inventories fell by 3.2 million barrels to 424.1 million barrels in the week ending October 2, compared to analyst expectations of a 1.7 million barrel decline. Distillate stocks, including diesel and jet fuel, decreased slightly.
The ongoing tensions in the region and the impact on oil supplies continue to influence market dynamics. As the situation develops, market participants will closely monitor supply disruptions, inventory levels, and geopolitical events that may affect the global oil market.
Key points
- Oil prices rose due to escalating shipping risks in the Gulf and Strait of Hormuz.
- The International Energy Agency agreed to accelerate oil stock releases to address supply disruptions.
- US crude inventories declined more than expected, supporting oil prices.
