Oil prices remained relatively stable on Thursday following an increase in the previous session, as investors evaluated the potential for a recovery in West Asian crude supply to counterbalance persistent concerns regarding the region. Brent crude was trading near $98 a barrel after reaching $104 during Wednesday’s intraday trade. West Texas Intermediate for November delivery fell 0.4% to $90.07 a barrel on Thursday, following a 1.2% gain in the previous session. Both benchmarks experienced an increase of approximately $1 per barrel on Wednesday. Brent experienced a monthly increase of approximately 14% in September, marking its most significant rise since July, whereas WTI saw an uptick of about 5% for the month. Wall Street analysts and traders indicated that crude flows from West Asia were approaching pre-war levels, although the recovery of fuel supplies had progressed at a more gradual rate. Qatar expressed optimism on Tuesday regarding the potential for shuttle diplomacy between Tehran and Washington to yield a significant breakthrough.
Saudi Arabia has resumed oil tanker loadings from Yanbu as of Tuesday, following the restart of its East-West Pipeline. Meanwhile, Iranian officials stated on Wednesday that Tehran had received Washington’s official response to its latest proposal aimed at concluding the seven-month conflict. The development occurred days after US President Donald Trump publicly rejected the proposal, as reported by source. Iranian Foreign Minister Abbas Araghchi conveyed the US response to President Masoud Pezeshkian during a Cabinet meeting, as stated by government spokesperson Fatemeh Mohajerani. Crude prices experienced an increase for the third consecutive month in September, as negotiations between Washington and Tehran did not yield any advancements toward a sustainable peace agreement that would facilitate the complete reopening of the Strait of Hormuz.
Months of volatile negotiations following the initiation of hostilities by the US and Israel in February have led to significant price fluctuations, complicating traders’ ability to ascertain the trajectory of crude prices. The situation has been further complicated by attacks on merchant vessels and strikes by Tehran-aligned militants targeting Saudi Arabia’s East-West pipeline, which exacerbate existing concerns regarding oil supplies. “We simply don’t know how to model the endgame,” JPMorgan analysts stated, emphasising the ambiguity surrounding the potential evolution of the conflict. When the conflict began, the bank had assumed there were economic thresholds the US administration would not cross. Six months into the war, JPMorgan indicated that numerous thresholds had been surpassed, yet a definitive exit strategy remained elusive. The risk of further supply disruptions has also heightened the likelihood of elevated oil prices.
Daan Struyven indicated that recent attacks have demonstrated the potential for shipping disruptions to escalate and proliferate. Goldman Sachs has delineated a scenario wherein oil prices might escalate to $120 a barrel should assaults on vessels in the Middle East become more pronounced. If exports return to normal, the bank anticipates that oil prices will trend back toward $80 a barrel. Struyven indicated that risks associated with shipping have emerged as a significant factor influencing oil prices. Goldman Sachs anticipates “meaningful upside to crude oil prices” and also projects an increase in natural gas and refined product prices. Struyven indicated that supply shocks in petrol and fuels are more significant than those observed in the crude market.
