Oil prices rise to $110/barrel amid increasing attacks on ships

The situation in the Strait of Hormuz has sharply escalated in recent days. According to the UK Maritime Trade Coordination Office (UKMTO) and relevant monitoring agencies (in particular Lloyd's List), a record wave of attacks on ships in the Strait of Hormuz was recorded in early October. In the first half of October alone, there were 25-26 attacks or threatening incidents with ships in the region, with the intensity of attacks increasing sharply last week, which led to a further increase in quotes.

 

December Brent crude futures rose 4.4% to $109.4/barrel for the week (+14% for the month, +56% since the start of the Iran war). Analysts expect further price increases due to the intensification of Iranian attacks on ships ahead of the US congressional elections, with the aim of maximizing global oil and fuel prices in the US and lowering Trump and the Republican Party's approval ratings.

 

Markets have not reacted to reports that crude oil exports from the Middle East have increased to levels equivalent to 80% of pre-war supplies, while US Central Command said on Friday that more than 40 ships had passed through the Strait of Hormuz in the past 24 hours.

 

Over the weekend, Iran again provided the US, through intermediaries, with a plan to suspend attacks for 7 days and restore the passage of ships through the Strait of Hormuz, with the conditions of unblocking Iran's frozen assets and ending the naval blockade.

 

US lawmakers (Democrats and Republicans) have introduced a bill blocking President Trump’s deal with the Russian Federation to release several hundred million barrels of diesel fuel onto the world market. But the Ukrainian military’s strikes on Russian refineries and ports are the best sanctions for the Russian Federation. According to Bloomberg, in the first 10 days of October, seaborne deliveries of Russian diesel and kerosene fell to a pitiful 146,000 barrels per day, the lowest level in 10 years (since records began in 2016)! Total exports of petroleum products from the Russian Federation also fell to 979,000 barrels per day.

 

Yemen's Houthis continue to attack all of Saudi Arabia with drones and missiles, including oil infrastructure, which is also fueling oil prices.

 

According to traders, as a result of Iranian and Houthi attacks on ships, the cost of transporting crude oil from the Middle East has increased by $20-30/barrel, so only the signing of a peace agreement with Iran can lead to a significant decrease in oil prices.