Key Points
- Brent climbs $1.33 to $101.53 a barrel
- WTI rises $1.11 to $89.39
- US crude stocks fall 3.2 million barrels
ISLAMABAD: Oil prices rose on Thursday as attacks on commercial shipping in the Gulf and Strait of Hormuz intensified concerns over the security of Middle East oil supplies, offsetting pressure from increased strategic stock releases.
Brent crude futures rose $1.33, or 1.33 per cent, to $101.53 a barrel by 0116 GMT, while US West Texas Intermediate (WTI) crude gained $1.11, or 1.26 per cent, to $89.39. Both benchmarks had settled lower on Wednesday, with Brent at $100.20 and WTI at $88.28.
The latest gains tracked growing risks to oil shipments against evidence that Middle Eastern producers are continuing to export substantial volumes.
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The Strait of Hormuz, a critical waterway between the Gulf and the Gulf of Oman, carried shipments equivalent to about 20 per cent of global oil and fuel supplies before the war.
Supply risks
Tanker attacks in the Strait of Hormuz reached their highest weekly level since the US-Iran war began on February 28, according to maritime security sources.
At least 12 incidents, including attacks, attempted attacks, drone surveillance and radio harassment, were recorded between September 28 and October 5.
The latest reported incident involved a tanker north of Qatar that was struck by multiple projectiles, with casualties reported, according to the United Kingdom Maritime Trade Operations. The UKMTO monitors commercial shipping in the region. UKMTO advised vessels to transit with caution as authorities investigate the incident.
The increase in attacks has raised the cost and risk of transporting crude and refined products from Gulf producers to international markets.
However, producers have continued to export oil given the limited alternatives for moving large volumes of crude out of the region.
Shipping data indicates that Middle East crude exports remained strong in September.
The seven-day average reached 18.3 million barrels per day on September 30, compared with about 18 million barrels per day in the 12 months before the war, according to Kpler data.
That resilience has helped prevent a more severe physical supply shortage. But traders remain concerned that prolonged attacks could eventually reduce the number of tankers willing or able to carry cargoes through the region.
“Strategic stock releases can augment supply flows temporarily but do not create new production capacity,” Daniel Hynes, senior commodity strategist at ANZ, said.
Support oil prices
US inventory data also supported crude prices. Commercial crude inventories in the United States fell by 3.2 million barrels to 424.1 million barrels in the week ended October 2, according to the US Energy Information Administration.
Analysts had expected a decline of about 1.7 million barrels.
The drawdown chased US crude exports up by 1.2 million barrels per day to 4.77 million barrels per day, while refinery crude processing also rose.
Distillate inventories, including diesel and heating oil, declined by 42,000 barrels and remained well below typical levels for this time of year.
The inventory figures came a day after the International Energy Agency agreed to accelerate releasing oil from strategic reserves and prioritise diesel supplies under an emergency plan launched earlier in the year.
The additional barrels could ease near-term supply pressure, but the measures do not address the underlying security risks facing tankers operating around the Gulf and the Strait of Hormuz.
For global oil markets, the immediate balance therefore depends on whether Gulf producers can maintain exports while shipping attacks persist. Continued flows would limit the physical shortage, but higher insurance, freight and security costs could keep crude and fuel prices elevated.
