Oil prices experienced a slight increase on Friday, with Brent rising 29 cents to $102.60 per barrel and West Texas Intermediate gaining 27 cents to $93.14. This comes after a significant surge on Thursday, driven by reports that China had halted fuel exports and the US was sending more troops and carriers to the Middle East. The mixed supply signals have led to fears of worsening global fuel shortages.
The Wall Street Journal reported that the US is sending a third aircraft carrier and up to 10,000 more troops to the Middle East as President Donald Trump weighed resuming strikes on Iran after the US midterm elections. This development has contributed to the uncertainty in the market, with traders cautious about the potential impact on oil supplies.
China's decision to curb refined product exports has also driven market worries. Beijing restricted fuel exports in March after the outbreak of the US-Israeli war on Iran, then relaxed the curbs in July and is managing diesel, gasoline, and jet fuel shipments on a monthly basis. The country started a weeklong holiday on Thursday without giving major refiners a green light to export to regions other than Hong Kong and Macau in October.
The Trump administration has told Germany and France to draw down emergency diesel inventories to help ease soaring global fuel prices or face a potential US diesel export ban. According to three people close to the discussions, the US has asked the EU to release 120 million barrels of diesel over the next six months. EU countries hold nearly 109 million tons of emergency crude and fuel stocks.
Despite the slight increase in oil prices, Brent is on track for a 1.93% loss for the week after a 14% overall gain in September, while WTI gained just 4% last month. KCM Trade chief analyst Tim Waterer noted that the market is taking stock of a distinctly mixed set of signals this week, with traders "simply taking a breather" after a disruptive Thursday.
The market is also influenced by reports that Saudi Arabia's export picture is looking healthier, which is being offset by the US's decision to send more troops to the Gulf and China's curbs on refined product exports. Mukesh Sahdev, chief oil analyst of XAnalysts, said that US pressure on EU nations to release oil is also adding to the check on prices.
In the context of the global oil market, the developments have led to fears of worsening fuel shortages. The situation remains uncertain, with traders monitoring the situation closely for any signs of further disruptions to oil supplies. The US's decision to send more troops to the Middle East and China's curbs on fuel exports have contributed to the uncertainty.
Key points
- The US is sending a third aircraft carrier and up to 10,000 more troops to the Middle East.
- China has halted fuel exports, contributing to fears of worsening global fuel shortages.
- The Trump administration has asked the EU to release 120 million barrels of diesel over the next six months.
