Crude Oil Prices Climb $1 on Middle East Risks

By Adedapo Adesanya

Crude oil prices gained over $1 early on Wednesday as escalating Middle East tensions fuelled fears of supply disruptions, while falling crude and product inventories in the United States lent support to the market.

Brent crude futures rose $1.59 or 1.5 per cent to $110.38 per barrel, while US West ​Texas Intermediate (WTI) crude gained $1.36 or 1.4 per cent to trade at $99.18 per barrel.

Maritime security risks have intensified in recent weeks, with ship-tracking firm Kpler reporting at least 18 vessel attacks over the past two weeks.

Market analysts warned that Iran was targeting tankers beyond the Strait of Hormuz, extending its operations into the Gulf of Oman and threatening Gulf crude loadings and ship-to-ship transfers that support regional oil shipments.

Record-high tanker freight rates in the Persian Gulf are adding to pressure on oil prices as tensions in the Middle East disrupt shipping operations and make crude transportation more expensive.

ING commodity strategists attributed the surge in rates to the less efficient use of tankers, partly driven by increased ship-to-ship transfers in the Gulf of Oman as operators seek to reduce the risk of drone and missile attacks on larger vessels near the Strait of Hormuz.

The additional transfers, delays and security risks are raising shipping costs and could further increase the cost of delivering crude oil to global markets.

In Saudi Arabia, Yemen’s Houthi rebels on Monday claimed responsibility for attacks on a Saudi Aramco facility in Yanbu, the Shaybah oilfield and the airports in Riyadh and Abha.

Meanwhile, the death toll from a Houthi attack on Yemeni government forces on Monday climbed to 73 as fighting escalated.

Amid these developments, mediation efforts continued with ​Iran’s president discussing mediation efforts in a meeting with Pakistan’s army chief in Tehran. However, Iran told Pakistan’s army chief there would be no talks with the US until its ​demands were met.

In the US, two Energy Department officials said on Tuesday they ⁠were working ​with refiners around the world to boost fuel output as a diesel ​shortage has raised prices.

The American Petroleum Institute (API) estimated that crude oil inventories in the US fell by 4.93 million barrels in the week ending October 16. Official data from the US Energy Information Administration (EIA).