Oil prices increased on Wednesday as traders expressed concerns regarding supply disruptions in the Middle East. The rise in prices comes amid escalating risks to shipping routes in the Red Sea and threats to oil infrastructure in Saudi Arabia. Brent crude futures saw an increase of $1.34, or 1.23 per cent, reaching $110.10 per barrel. Meanwhile, US West Texas Intermediate (WTI) crude rose by $1.18, or 1.21 per cent, to $99 per barrel.

This upward movement in prices followed a decline in the previous trading session, where prices had eased after discussions between Iran’s president and Pakistan’s army chief regarding mediation efforts in Tehran. The fluctuation in oil prices highlights the sensitivity of the market to geopolitical developments in the region.

Traders are closely monitoring these developments, as any disruptions to oil supplies can have significant implications for global markets. The ongoing tensions have prompted concerns about the stability of oil shipments from the region, which is a critical source of energy for many countries.

Escalation of Attacks on Vessels Raises Alarm

Concerns regarding oil supplies have intensified following reports of a supertanker catching fire after allegedly striking a sea mine south of the Strait of Hormuz. According to Iran’s Revolutionary Guards Navy, the vessel was reportedly “violating” Iranian regulations at the time of the incident. Ship-tracking firm Kpler noted that at least 18 vessel attacks were reported over a two-week period, raising alarms about the safety of maritime operations in the area.

Analysts from LSEG indicated that attacks on tankers have expanded beyond the Strait of Hormuz, a crucial route for global oil shipments. They noted that Iranian forces have been targeting vessels as far south as the Gulf of Oman, which poses threats to loadings outside the Arab Gulf. This escalation in attacks has heightened concerns regarding the security of oil supplies from the region.

On Monday, the Houthis claimed responsibility for attacks on strategic locations in Saudi Arabia, including a Saudi Aramco site in Yanbu and the Shaybah oilfield. The ongoing conflict has reportedly resulted in significant casualties, with the death toll from a Houthi attack on Yemeni government forces rising to 73, as reported by Reuters. The situation remains fluid, with Iranian officials stating that they have not received a response to their peace negotiation offers from Saudi Arabia or the Houthis.

US Efforts to Stabilise Fuel Supplies Amid Shortages

Despite the recent gains in oil prices, crude prices had previously retreated from a five-month high. On Tuesday, Brent crude futures settled down by 76 cents, or 0.69 per cent, at $108.79 per barrel, after reaching a high of $111.99. The November contract for US WTI crude, which expired on Tuesday, closed at $101.79 per barrel, down $1.87 or 1.8 per cent.

In response to rising prices, US Energy Department officials announced that they are collaborating with refiners globally to boost fuel production, particularly in light of a diesel shortage. Additionally, US crude oil inventories are projected to have declined in the week ending October 16, alongside stocks of refined petroleum products, according to a Reuters poll.

The eight analysts surveyed by Reuters estimated a decrease of approximately 800,000 barrels in US crude inventories during this period. Market participants are closely observing developments in the Middle East, as ongoing threats to shipping routes and energy infrastructure could significantly impact oil supplies and prices in the near future.

Long or Short, get news the way you like. No ads. No redirections. Download Newspin and Stay Alert, The CSR Journal Mobile app, for fast, crisp, clean updates!

App Store – https://apps.apple.com/in/app/newspin/id6746449540

Google Play Store – https://play.google.com/store/apps/details?id=com.inventifweb.newspin&pcampaignid=web_share