After an initial decline, oil prices rebounded on Tuesday as markets evaluated a US executive order that relaxed certain sanctions and tariffs associated with Russian energy exports. Meanwhile, renewed attacks in Saudi Arabia and Yemen sustained apprehensions regarding potential disruptions in Middle East supply. Brent crude futures increased by 21 cents, or 0.20%, reaching $109.76 per barrel. Meanwhile, US West Texas Intermediate crude futures for November delivery, set to expire on Tuesday, saw a rise of 0.11%, bringing the price to $104 per barrel. Brent reached $110.70 a barrel in the previous session, marking its highest level since May 20. US President Donald Trump issued an executive order on Friday nite waiving significant Russia-related sanctions and tariffs, including duties on Russian goods and penalties for countries purchasing its oil and gas.
However, Trump stated on Saturday that he had not yet reached a definitive conclusion regarding the issue. US Secretary of State Marco Rubio stated that officials desired additional time to evaluate the situation. Russia’s crude oil production increased by 65,000 barrels per day in September, reaching 8.43 million barrels per day. However, this output still lagged approximately 870,000 barrels per day behind the level recorded a year earlier, according to the International Energy Agency’s report last week. Meanwhile, Yemen’s Iran-aligned Houthis announced on Monday that they had executed multiple attacks on Saudi energy, airport, and military installations. These encompassed an Aramco facility in Yanbu, the Shaybah oilfield, King Khalid International Airport in Riyadh, and Abha airport. Saudi authorities have yet to provide immediate confirmation of the claims, and Reuters has been unable to independently verify them. On Monday, a Houthi assault on a training facility for government security forces in Yemen’s Shabwa province resulted in the deaths of 58 individuals and left over 200 injured, as reported.
The renewed attacks have heightened concerns regarding regional stability and the potential for disruptions to energy supplies from the Middle East, sustaining oil prices above $100 a barrel. In the United States, it was anticipated that crude oil inventories experienced a decline in the previous week, alongside a reduction in stocks of refined petroleum products, as indicated by a preliminary poll published on Monday. Uncertainty persists regarding the trajectory of the conflict. JPMorgan analysts indicated that the eventual trajectory of the war presents significant modelling challenges. At the onset of the conflict, the bank anticipated that the US administration would refrain from surpassing specific economic thresholds. Seven months later, numerous thresholds had been surpassed, yet a definitive exit strategy continued to be unattainable. The prospect of additional supply disruptions has further solidified anticipations of elevated oil prices.
Daan Struyven noted that recent attacks underscored the potential for shipping disruptions to proliferate and escalate. Goldman Sachs has delineated a situation where oil prices might surge to $120 a barrel should hostilities against vessels in the Middle East intensify. However, a reversion to typical export levels could exert downward pressure on prices, potentially bringing them toward $80 a barrel. Struyven indicated that risks to shipping have emerged as a crucial factor influencing oil prices, noting that the bank anticipates considerable upside potential for crude. Goldman Sachs anticipates an increase in natural gas and refined fuel prices, noting that supply shocks are likely to exert a more significant influence on gas and refined products compared to crude oil.
