Iran's attacks on ships in Hormuz and Houthi strikes on Saudi Arabia sent oil prices up 6% in a week
Yemen's Iran-backed Houthis launched a missile and drone attack on Saudi Arabia's main airport over the weekend, killing and wounding dozens. Oil infrastructure was also targeted, raising the risk of escalation and potentially drawing Turkey and Pakistan, which have pledged support to Saudi Arabia in the event of an attack, into the war.
Iran over the weekend attacked four ships with drones and missiles that were crossing the Strait of Hormuz outside the “established corridor.” Iran said that actions against “violating” vessels would no longer be limited to the Strait of Hormuz, and any ship using the unauthorized route would be pursued throughout the region and “punished.”
December Brent crude futures rose 6% to $106.5/barrel in the week (+5.5% in the month and +52% since the start of the Iran war). Analysts predict that prices will continue to rise due to reduced supplies, although according to experts, supplies from the Persian Gulf in September reached almost 80% of pre-war levels, which will significantly reduce the supply deficit on the world market.
At the same time, transportation of petroleum products, including gasoline, liquefied gas, diesel fuel, and aviation kerosene, is recovering much more slowly due to the high cost of freight, insurance, and the loss of some of the region's oil refining capacity.
After Russia promised to supply 500,000 tons of diesel fuel to the world market, the US Treasury Department lifted sanctions for 6 months to support Trump's decision to try to lower domestic fuel prices ahead of the election.
The risk of attacks on tankers has pushed the cost of transporting crude oil from the Middle East to China to a record $1.4 million per day last week, up from $30,000-$80,000 per day before the war. This is also an additional factor in the rise in prices for oil and petroleum products.
Trump himself and his administration continue to blame Ukraine for the rise in U.S. diesel prices, which are allegedly caused by Ukrainian attacks on Russian refineries. But analysts say Russian crude oil processing rates recovered to 3.98 million barrels per day in September as damaged refineries gradually resume operations.
Saudi Aramco cut the price of its Arab Light crude to Asian buyers by $5/barrel for November delivery on Oct. 5, confirming an increase in Saudi crude exports, which reached 5.28 million barrels per day in September, the highest since the start of the war. At the same time, Saudi Arabia said that crude oil production fell to 6.238 million barrels per day in August, the lowest since 1990.
According to Vortexa, the volume of crude oil stored on tankers that have been idle for at least 7 days decreased by 9.7% to 86.27 million barrels in the week of October 3-9, which also confirms the reduction in oil inventories.
