By Yakubu Lawal
Crude oil prices extended their climb early this week, with Nigerian Brent crude topping $110 per barrel for November Contract while American WTI back at over $100, as traders turn increasingly pessimistic about the resumption of normal oil flows out of the Persian Gulf.
At the time of writing, Brent crude was trading at $109.68 per barrel, with West Texas Intermediate at $98.55 per barrel. Brent crude is trading at its highest in five months.
The price trend follows reports of intensive tanker attacks in the Strait of Hormuz, which have severely affected oil flows, according to Kpler. The firm, which earlier this month said oil exports have recovered to pre-war levels, is now reporting that export rates have been once again decimated, this time by Iranian strikes on tankers in the waterway.
Reuters reported at least 18 tanker attacks over just the last two weeks, based on data from Kpler. The firm reported earlier this week that the daily average flow of oil out of the Persian Gulf had shrunk to 8.5 million barrels, from “more than 20 million barrels daily” for two weeks ago, per a separate Reuters report.
“Oil prices remain well-supported amid ongoing tensions in the Middle East despite relatively strong Persian Gulf flows,” ING’s commodity analysts wrote in a note earlier today. “This suggests the market is pricing in a significant risk premium, given the situation’s volatility,” Warren Patterson and Ewa Manthey also wrote, noting that if oil flows remained stable and strong, the war premium would gradually vanish. “Clearly, there are no signs of this yet,” they commented.
In additional support for oil prices, the Yemeni Houthis struck Saudi Arabia again, targeting energy infrastructure, airports, and military sites. The escalation in Houthi-Saudi fighting has contributed considerably to already heightened oil market volatility on Middle Eastern developments.