Brent and WTI crude jumped more than 3% Thursday after Iran escalated tanker attacks in the Strait of Hormuz and Hurricane Isaias knocked out a quarter of Gulf of Mexico output. Vessel traffic through Hormuz fell to its lowest level in over two months, and Houthi militants separately fired ballistic missiles at Saudi Arabia.
Brent crude gained 3.8% to $104.04 a barrel on Thursday, as Iran stepped up its attacks on tankers transiting the Strait of Hormuz. WTI crude advanced 3.4% to $91.28 as Hurricane Isaias cut into U.S. Gulf of Mexico production.
Nine tankers have come under attack in and around Hormuz over the past week, jeopardizing the recent recovery in crude flows through the strait.
Hormuz tanker attacks squeeze transit volumes
Seven commodity vessels passed through Hormuz on Tuesday, the lowest figure since July 23, according to shipping data from analytics firm Kpler. Crude crossing the strait fell 27% from a wartime high the week before, to at least 10.1 million barrels a day, Kpler analysts wrote in a note.
That is back to the strait's September average, but still 74% of its pre-war level. Most of the decline came from ship-to-ship transfers in the Gulf of Oman, while exports from the Gulf of Oman coast and the Red Sea rose to 6.7 million barrels per day, more than twice pre-war levels, keeping overall Middle East crude exports near the pre-war level, analysts said.
In the latest incident, projectiles struck a tanker 51 nautical miles north of Qatar's Madinat ash Shamal, with casualties reported, the United Kingdom Maritime Trade Operations agency said. Arab sources, unverified, also reported several severe explosions in the Strait of Hormuz on Thursday, with a tanker targeted.
Hurricane Isaias slashes Gulf of Mexico output
The storm has pulled additional barrels off the market on the other side of the Atlantic. Oil companies have shut in about 500,000 barrels per day, or 25% of offshore production, in the Gulf of Mexico as Hurricane Isaias churns toward the coasts of Alabama, Mississippi and the Florida panhandle.
Tensions are also sharply escalating on land. Houthi militants fired ballistic missiles at airports in Riyadh and the city of Abha on Tuesday and Wednesday, killing three people and injuring 36, according to the state-owned media outlet Al Arabiya. Saudi Arabia intercepted another volley of ballistic missiles fired Thursday at Riyadh and Khamis Mushait, a spokesperson for the kingdom's military said.
Risk premium holds as Iran strike delayed
Prices eased from session highs after President Donald Trump said the U.S. would not attack Iran before the November midterm elections. NBC News, citing unnamed sources, had earlier reported that Trump and his national security team were considering renewing strikes in the coming weeks.
TD Securities director of commodity strategy Ryan McKay noted that while flows from the region have largely normalized, the need for U.S. Navy escorts and the constant risk of attack raise doubts about the longer-term feasibility of current shipping routes. "This ultimately warrants a sticky risk premium to remain in pricing," McKay wrote in a note to clients Thursday.
Sources: US Top News and Analysis, Commodities & Futures News, Investinglive RSS Breaking News Feed (snippet-based)
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