Crude oil prices were on course for a sharp weekly loss amid multiple reports about a strong rebound in tanker traffic in the Strait of Hormuz.
At the time of writing, Brent crude was trading at $73.78 per barrel, and West Texas Intermediate was changing hands for $70.53, even after the news of an Iranian strike on a commercial vessel in Hormuz that, Tehran suggested, had used a route not approved by the Iranian authorities. The strike promoted a 2% reversal in oil price movement, but it was not enough to quash optimism about tanker traffic overall.
Some analysts have adopted a cautious tone about the recovery in tanker traffic in Hormuz, however. ING’s Warren Patterson and Ewa Manthey, for instance, earlier today noted that almost all of that traffic is outbound, made up of tankers that have been stuck in the strait since March. The question of how many tankers are coming in to load crude in the Persian Gulf is a whole other topic.
“Vessel flows into the Gulf remain much more modest. It suggests that once stranded vessels have moved out, we could see a pullback in flows. Also, the latest strike on a vessel will likely slow traffic, with the International Maritime Organisation suspending its evacuation plan for stranded ships,” the ING team wrote earlier today in a note.
Reuters meanwhile pointed out that while tankers are leaving Hormuz en masse, overall vessel traffic remains just a fraction of pre-war levels, when an average of 125 ships traversed the waterway.
In further potentially bullish news for oil, the devastating earthquakes in Venezuela earlier this week are expected to disrupt the country’s oil production due to power outages caused by the quakes, even though Venezuela’s oil infrastructure is far from where the quakes hit the hardest.
By Irina Slav for Oilprice.com
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