Oil Prices Rise as Hormuz Shipping Attacks Raise Supply Fears

Post by : Saif

Oil prices climbed on Thursday as growing attacks on ships in the Gulf and Strait of Hormuz increased concerns about energy supplies from the Middle East.

Brent crude futures rose $1.33, or 1.33%, to $101.53 a barrel by 0116 GMT. US West Texas Intermediate crude gained $1.11, or 1.26%, to $89.39 a barrel.

The gains came despite a decision by the International Energy Agency to speed up the release of oil stocks and prioritize diesel supplies as governments try to deal with high fuel prices and supply disruptions linked to the conflict involving Iran.

Shipping Attacks Increase in Strait of Hormuz

Concerns over oil transportation have grown as attacks on tankers increased in October.

The Strait of Hormuz is one of the world's most important energy routes. Before the current conflict, shipments through the waterway accounted for roughly 20% of global oil and fuel supplies.

Tanker attacks reached their highest weekly level since the start of the Iran war last week, according to shipping sources. The rise in attacks has come as Gulf oil producers increase exports despite greater risks to vessels, cargo and crews.

In the latest incident, a tanker north of Qatar was hit by several projectiles, according to the United Kingdom Maritime Trade Operations agency. The attack caused casualties.

Read more: Oil Prices Slip as Middle East Exports and G7 Reserves Ease Supply Fears

Higher Risks for Gulf Oil Exports

Energy analysts said oil producers appear willing to continue shipping crude despite the growing dangers because Gulf producers have limited alternatives for reaching international markets.

Daniel Hynes, senior commodity strategist at ANZ, said previous attacks in the region had reduced shipments from the Persian Gulf. The current situation is different because producers continue to depend heavily on the Strait of Hormuz for exports.

The increased security risks could push transportation costs higher and add pressure to global oil markets if attacks continue.

IEA Oil Release Offers Temporary Relief

The International Energy Agency has agreed to accelerate the release of oil stocks as countries try to reduce the impact of supply disruptions.

However, analysts said the move may provide only temporary support for global supplies. The released oil is expected to include barrels already covered by the IEA's original 400-million-barrel release plan announced after the conflict began.

Strategic oil reserves can increase available supplies for a limited period, but they do not increase global production capacity.

US Oil Inventories Support Prices

Fresh US inventory data also provided support for oil prices.

US crude inventories fell by 3.2 million barrels to 424.1 million barrels during the week ending October 2, according to the Energy Information Administration.

The decline was larger than analysts had expected. A Reuters poll had forecast a decrease of about 1.7 million barrels.

US distillate inventories, which include diesel and jet fuel, also declined by 42,000 barrels to 105.14 million barrels.

Diesel and jet fuel stocks remain below typical levels for this time of year, adding another concern for energy markets.

Global Energy Markets Face Continued Pressure

The combination of shipping attacks, supply risks and lower US inventories is keeping oil markets under pressure.

The Strait of Hormuz remains particularly important because of its role in moving crude and fuel from major Gulf producers to international buyers. Any prolonged disruption could raise transportation costs and push oil and fuel prices higher in countries that depend on Middle Eastern supplies.

For consumers and businesses, sustained oil prices above $100 a barrel could increase costs for transportation, manufacturing and other energy-intensive activities.

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