Crude oil prices, which dipped on Tuesday, reversed their direction, with Brent ticking above $100 again earlier today following reports of fresh Houthi attacks on Saudi energy infrastructure.
At the time of writing, Brent crude was trading at $101.49 per barrel and West Texas Intermediate was changing hands for $90.14 per barrel, despite a statement from Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, who said Tuesday the kingdom’s oil flows via the Rast-West pipeline had rebounded to 5.8 million barrels daily. The statement countered reports of another shutdown of the pipeline after Houthi attacks.
However, the Saudi air transport authorities confirmed attacks on two airports, one of them in Jazan, the home of a 400,000-bpd Aramco refinery. This appears to have fueled concern about the security situation in the Middle East despite the improving flows of crude and even products: per Vitol, some 12 million barrels of crude oil are getting out of the Persian Gulf daily, plus 2 million barrels of fuels, as reported by Reuters.
“There is a clear tug-of-war at the moment between improving supply from the region and lingering threats to supply,” ING’s commodity analysts said in a note earlier today. “Clearly, it’s looking as though the only way to see prices trade sustainably lower is for lingering risks to be addressed. For now, the market is likely to remain nervous to any potential supply disruptions.”
This means the upside potential for oil prices will remain in place for as long as the fighting continues, regardless of export volume reports, as traders turn their attention to the logistics details of getting crude out of the Persian Gulf. These have become extremely complicated, driving freight costs to levels previously unthinkable. Supertanker rates are running at over $1 million per day and now the cost surge is spreading to smaller vessels as well, Sparta Commodities’ senior oil market analyst June Goh warned earlier this week.
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