- Oil tankers caught fire in the Strait of Hormuz after violating Iranian regulations.
- The Houthis have attacked several energy facilities in Saudi Arabia.
- Reports this week indicated that Trump had waived sanctions on Russia.
Oil prices rose on Thursday as geopolitical tensions escalated, renewing supply worries. Fresh attacks on tankers passing through the Strait of Hormuz threatened the recovering oil flows. At the same time, the Houthis continue to attack energy facilities in Saudi Arabia. However, reports that Russian oil could increase in the global market capped gains.
Middle East oil flows (Source: Kpler. Vortexa, Bloomberg)
Reports on Tuesday indicated that tankers caught fire in the Strait of Hormuz after violating Iranian regulations. Oil flows from the Middle East have improved significantly since the height of the war, easing supply concerns. However, the new attacks could make traders using the route more cautious. At the same time, the destruction of these fuel tankers means a tighter market and higher prices.
“Two violating oil tankers were set ablaze and halted due to the explosion of mines planted by the brave sailors of the IRGC Navy at an illegal crossing point in the southern part of the Strait of Hormuz,” the IRGC said in a statement published on their official Sepah News website.
Although the heavy attacks between the US and Iran have paused, Tehran continues to threaten supply through the Strait of Hormuz. At the same time, market participants remain cautious since the conflict between the US and Iran could resume after the US midterm elections.
Elsewhere, the Houthis have attacked several energy facilities in Saudi Arabia, including buildings at Saudi Aramco. Moreover, the militant group has targeted airports, causing panic and uncertainty in the country. A war in a major oil-producing country directly impacts global supply. With no end in sight and no peace talks, the risk of oil prices will remain.
However, oil has made smaller gains this time compared to when the war began. Several developments in the global market have put a lid on gains. Major oil producers in the G7 plan to increase fuel stocks in the market. At the same time, Trump recently announced that Russia would supply the US with diesel, easing the burden of higher fuel prices.
Furthermore, reports this week indicated that Trump had waived sanctions on Russia. Therefore, the country will start exporting more of its oil to the global economy, easing supply concerns.
