Oil prices surpassed the $110 per barrel threshold once more on Wednesday, driven by apprehensions regarding supply in the Middle East. Traders expressed concerns over shipping risks and potential threats to oil infrastructure in Saudi Arabia. Brent crude futures surged by over $1, reaching approximately $110 per barrel. WTI Crude futures experienced an increase of over a dollar, trading at approximately $99 per barrel. A supertanker caught fire after striking a sea mine in the south of Strait of Hormuz while “violating” Iranian regulations, according to a statement from Iran’s Revolutionary Guards Navy reported by Iranian media on Tuesday. According to a note released on Monday by shiptracker Kpler, there were at least 18 reported vessel attacks over the span of two weeks.
Attacks on tankers have now expanded beyond the Strait of Hormuz, source quoted LSEG analysts as saying in a note. “Iran has been targeting vessels as far south as the Gulf of Oman, threatening loadings outside of the Arab Gulf, as well as the ship-to-ship transfers that have helped to support Middle East loadings as the conflict has dragged on.” The Houthis have asserted accountability for assaults on a Saudi Aramco facility in Yanbu, the Shaybah oilfield, as well as Riyadh and Abha airports in Saudi Arabia. The death toll from a Houthi attack on Yemeni government forces on Monday increased to 73 as hostilities escalated.
Notably, the increase in oil prices today follows a decline observed yesterday, which was prompted by discussions held by Iran’s president regarding mediation efforts during a meeting with Pakistan’s army chief in Tehran. Iranian Foreign Minister Abbas Araqchi stated in a television interview on Tuesday that Iran has yet to receive a response from Saudi Arabia or Yemen’s Houthis regarding its proposal to assist in facilitating peace talks. JPMorgan analysts indicated that the outcome of the Middle East conflict is challenging to evaluate, highlighting the uncertainty surrounding potential developments in the situation. When the war commenced, the bank had presumed that there existed economic thresholds that the US administration would refrain from crossing.
Six months into the conflict, JPMorgan indicated that several of those thresholds had been crossed, yet a clear exit strategy remained elusive. The risk of further supply disruptions has also heightened the likelihood of elevated oil prices. Daan Struyven stated that recent attacks have demonstrated the potential for shipping disruptions to proliferate and intensify. Goldman Sachs has delineated a scenario where 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.
