Crude oil prices ticked higher today, after dipping on Tuesday, following reports that President Trump has no intention of easing sanction pressure on Iran, which has decimated exports from one of OPEC’s biggest producers.
At the time of writing, Brent crude was trading at $103.13 per barrel, and West Texas Intermediate was trading at $89.53, both set to end the month with a gain. For Brent, the gain is more pronounced, at around $10 per barrel, while for WTI, the gain would be about $3 per barrel.
Earlier in the week, prices dipped slightly on the news that oil flows from the Persian Gulf have recovered to a level close to pre-war daily averages but there appear to be doubts about whether the recovery is sustainable.
“Continued uncertainty over sanctions relief and negotiations is keeping a geopolitical risk premium embedded in prices,” analyst Sugandha Sachdeva, founder of India-based SS WealthStreet said, as quoted by Reuters. “Improving supplies could cap further gains, but renewed disruption or an escalation in tensions could trigger another rally,” Sachdeva added.
Data from Kpler has suggested oil exports from the Persian Gulf have rebounded strongly this month, with Hormuz flows alone at 13.2 million barrels daily, or 77% of pre-war levels, CNBC reported this week. An earlier report by Reuters citing Kpler data as well, pegged Hormuz flows specifically at 7.4 million barrels daily, with total Middle East oil export rates at 12.8 million barrels daily.
“Despite more vessel traffic through the Strait of Hormuz, flows remain below pre-conflict levels, keeping the market undersupplied,” UBS’ commodity analyst Giovanni Staunovo said, as quoted by the publication.
It could be this shortfall that is keeping oil prices elevated, in addition to the still present risk for tankers in the Strait of Hormuz, in spite of the export recovery.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com
- Saudi Arabia Restarts Red Sea Crude Oil Loadings
- India Looks to Boost Exploration as Hormuz Crisis Threatens Supply
- US Distillate Stocks Continue to Fall As Crude Inventories Build
