Crude oil prices reversed their fall from earlier this week as traders grew less optimistic about a peace deal between the United States and Iran amid continuing tanker attacks in the Strait of Hormuz, with a record number of such attacks in October.
At the time of writing, Brent crude was trading at $92.43 per barrel, with West Texas Intermediate at $86.62 per barrel, both up from the start of the week but still sharply down from the end of October, when Brent crude was over $110 per barrel, and WTI was over $100.
As many as 37 vessels were attacked in the Strait of Hormuz last month, Reuters reported on Tuesday, citing data from the Washington Institute for Near East Policy. According to the International Maritime Organization, since the start of the war, a total of 130 vessels have come under attack in the area.
Houthi attacks on Saudi infrastructure also continue, further clouding the security situation in the Middle East and limiting the downward potential of oil prices, especially after one of the latest targets of the Houthis was the East-West pipeline, again.
“Even in the event a deal is struck, an increase in flows through the waterway would still depend on mine clearance, insurance costs and whether or not shipowners would even be willing to take the risk,” LSEG Oil Research said earlier this week, as cited by Reuters.
FxPro chief market analyst Alex Kuptsikevich, meanwhile, noted that the geopolitical premium to oil is gradually fading as energy flows out of the Persian Gulf improve. “Oil has fallen by more than 20% from its late-October highs as investors continue to price out geopolitical risk premiums,” Kuptsikevich said in a note Tuesday. “At the same time, transport costs are falling, while production and export volumes are returning to pre-war levels,” he added, noting a Reuters survey of experts estimated that OPEC oil production rose to 22.87 million barrels per day in October, which is close to 90% of February levels.
By Irina Slav for Oilprice.com
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