Oil set for weekly gains amid supply risks
The failure to reach an agreement between the U.S. and Iran keeps supply risks in the Gulf elevated. Although oil prices saw a slight decline on Friday, they remained on an upward trajectory for the week, driven by supply uncertainties in the Middle East and a larger-than-expected drop in U.S. crude inventories, a decline exacerbated by production halts caused by the hurricane.
As of GMT 06:23, Brent crude futures fell 50 cents (0.47%) to $105.42 per barrel.
WTI crude prices closed Thursday with a gain of over 3%, following a significant draw in U.S. crude stocks resulting from production stoppages due to the hurricane.
For the week, Brent crude gained 0.49%, while WTI rose by 5.91%.
Analysts point out that some form of agreement between the U.S. and Iran is necessary to provide the market with greater confidence that oil flows from the Middle East will remain robust.
An uptick in attacks around the Strait of Hormuz over the last 10 days has fueled supply concerns. This has been a response to the U.S. blockade of Iranian ports and the implementation of stricter sanctions last month.
Iran’s intensified attacks have led to a sharp decline in crude oil flows from the Gulf. Analysts noted that, in the absence of a comprehensive political agreement, any recovery in the Strait of Hormuz is likely to be slow and erratic. According to data from vessel-tracking firms, the average daily volume of oil passing through the Strait of Hormuz in the seven days leading up to October 13 stood at 11.62 million barrels, approximately 68 percent of the baseline level of 17.15 million barrels.
The Houthis have carried out dozens of attacks on Saudi infrastructure and, on Thursday, launched missiles at the presidential palace complex in Aden.
On Thursday, the International Energy Agency (IEA) decided to release more than 20 million barrels of diesel fuel into the market, alongside the remainder of the oil pledged for release from emergency reserves in March, with the aim of increasing supply and curbing rapidly rising prices.
In an effort to lower global shipping costs, which have reached record highs, the Trump administration is considering lifting sanctions on certain vessels, known as a "shadow fleet," that transport oil and petroleum products from countries such as Russia, Iran, and Venezuela.
These discussions come just days after Trump temporarily lifted sanctions on Russian diesel fuel, a move that drew criticism from Ukraine, European nations, and some members of his own Republican Party.
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