Oil surged more than 3% on Thursday as tanker attacks in the Middle East and a strengthening Gulf coast storm raised fears of supply disruptions. Prices then pared some of the gains after President Donald Trump said Washington would not strike Iran before the November midterm elections.
Oil jumped more than 3% on Thursday before settling off its session high after Trump ruled out an attack on Iran before the midterms. Brent crude futures expiring in December climbed 3.9% to settle at $104.11 a barrel, having been up more than 5% earlier in the session. U.S. West Texas Intermediate crude futures expiring in November added 3.3% to settle at $91.18 a barrel.
Trump rules out Iran strike before midterms
Crude pared some of its gains after Trump said on his Truth Social service that the U.S. would not attack Iran before the elections. According to Investing.com: "we will not be attacking Iran at any time prior to the Midterm Elections", Trump wrote, adding that 22 million barrels flowed through the Hormuz Strait the previous night with none coming from or going to Iran. Media reports had earlier said Washington was considering such an attack.
Iran's Tasnim News Agency, quoting foreign minister Abbas Araghchi, said Tehran was reviewing an American response to its proposal to reopen the Hormuz Strait within seven days if the U.S. ceased hostilities and unfroze Iranian assets.
Tanker attacks squeeze Hormuz traffic
Vessel transits through the strait slid to an over two-month low amid increased Iranian attacks on tankers, Reuters reported, citing shipping data from analytics firm Kpler. Iranian attacks on tankers hit their highest level last week of any week since the U.S.-Iran war began, coming shortly after transits briefly touched pre-war levels in September.
Red Sea shipping and Saudi Arabia's oil exports also stayed a concern, as hostilities between Saudi Arabia and Yemen's Iran-backed Houthis continued this week. On Wednesday, the United Kingdom Maritime Trade Operations body said a tanker was struck by multiple projectiles just north of Qatar, with casualties reported. The U.S. Treasury also sanctioned 17 of Iran's shadow fleet vessels that carry Iranian crude to South and East Asia.
Gulf storm and inventory draw add pressure
Crude also drew support from mounting expectations of weather-related disruptions on the U.S. Gulf coast. Tropical Storm Isaias was primed to rapidly strengthen into a hurricane and make landfall on the northern Gulf coast by the weekend, the U.S. National Weather Service said, with early-Thursday reports saying it had already strengthened into a hurricane. BP, Chevron, and Shell carry the most exposure, and a model cited by Reuters forecast up to 11.2 million barrels of oil production could be lost across the Gulf through the storm's duration.
U.S. crude oil inventories fell by 3.2 million barrels in the week to October 2, ducking expectations for an increase. Prices had also pared gains on Wednesday after the IEA said completing a previously announced release of 400 million barrels of oil stocks as soon as possible would bring about 100 million barrels to market. Analysts flagged that higher fuel prices could keep pushing up inflation, with Deutsche Bank noting few signs that energy-driven price pressure was easing.
Source: Investing.com
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