Brent crude swung back above $100 per barrel today as reports flow in about increasingly frequent Iranian attacks on tankers in Hormuz and U.S. Gulf of Mexico field operators began shutting in production ahead of a potential hurricane.
At the time of writing, Brent crude was trading at $102.50 per barrel, up by over 2% from Wednesday’s close, while West Texas Intermediate was changing hands for $89.96 per barrel, up by 1.90% from Wednesday.
Earlier this week, oil moved lower on the latest update from the International Energy Agency, which said it would soon decide on how exactly to start releasing those 100 million barrels in crude and fuels the G7 agreed on last week. Some observers noted this is not a new release, however, but a part of a plan announced in March for the release of some 400 million barrels from inventory to cushion the war blow on fuel prices.
In other words, that release has been pretty much priced in already, so the news about Iran stepping up attacks on tankers in the Strait of Hormuz served to push prices higher. According to new data from a U.S. Navy-led information outlet, there were a dozen attacks between September 28 and October 2 alone, Reuters reported earlier today.
Because of these attacks, tanker traffic in the critical waterway has once again dropped sharply, with flows this Tuesday at the lowest since late July, according to Kpler. However, producers are running out of options.
“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,” ANZ analyst Daniel Hynes said as quoted by Reuters today.
source: oilprice.com