Oil prices rise as Gulf shipping attacks fuel supply concerns
Oil prices rose on Thursday on persistent worries about supply from the key Middle East producing region amid an increase in attacks on shipping in the Gulf and the Strait of Hormuz.
Brent crude futures rose $1.33, or 1.33%, at $101.53 a barrel. US West Texas Intermediate (WTI) crude futures gained $1.11, or 1.26%, to $89.39.
Prices settled lower on Wednesday after the International Energy Agency agreed to accelerate the release of oil stocks and to prioritise diesel supplies under a plan launched in March, as governments seek to tackle record fuel prices and supply disruptions caused by the Iran war.
However, threats to oil shipping in the Gulf and the Strait of Hormuz, which carried shipments equal to about 20% of global oil and fuel before the war, have increased in October as the US-Israeli conflict with Iran enters its eighth month.
Attacks on tankers sailing through the Strait of Hormuz hit their highest last week of any week since the Iran war began as Gulf producers increase exports. The increase in attacks is occurring as more crude is flowing out of the Gulf but at higher costs and risk to cargoes and crew.
In the latest attack, a tanker north of Qatar was struck by multiple projectiles, causing casualties, the United Kingdom Maritime Trade Operations agency said on Wednesday.
“In the past, such attacks have resulted in a reduction in shipments from the Persian Gulf.
This time around, producers appear to be willing to take the risk of their vessels being damaged, as there is no alternative way to get their oil to international markets,“ Daniel Hynes, senior commodity strategist at bank ANZ, said in a note on Thursday.
Hynes also said the IEA’s oil release would likely consist of barrels that were already part of the group’s original 400-million-barrel release plan at the start of the Middle East conflict, meaning it does not appear to represent an additional draw on strategic inventories.
“Ultimately, strategic stock releases can augment supply flows temporarily but do not create new production capacity,” he said.
Inventory data from the US, the world’s biggest oil consumer and producer, were supportive for prices as crude stockpiles fell by a higher-than-expected amount, while diesel inventories declined slightly.
Crude inventories fell by 3.2 million barrels to 424.1 million barrels in the week ended October 2, the Energy Information Administration said on Wednesday, compared with analysts’ expectations in a Reuters poll for a 1.7 million-barrel decline.
Distillate fuel inventories, including diesel fuel and jet fuel, dropped by 42,000 barrels to 105.14 million barrels, well below their levels reported for this time of year in the past five years.