On Wednesday, oil prices reached their highest level in almost six weeks. The price of Brent crude went above $95 per barrel. Crude oil prices have increased due to rising tensions between the US and Iran and growing concerns about disruptions in supply routes in the Middle East due to threats to shipping by the Iran-backed Houthi militia in Yemen. Brent crude appeared at a high of $ 95.47 with a rise of about 5 percent.
US West Texas Intermediate crude was seen up by more than 5 percent at $88.61 per dollar. Both benchmarks reached their highest levels since June 11. The US military said that it attacked Iran for the 11th consecutive night. The US strikes came shortly after the Kuwaiti military said its air defense systems were intercepting Iranian drones.
Bab al-Mandeb Strait can become a hot spot
Apart from the renewed conflict over control of the Strait of Hormuz, Iran-backed Houthi rebels have opened a new front in the war. He has threatened to target ships carrying Saudi oil in the Bab al-Mandeb Strait and has announced a naval blockade of Saudi Arabia. Tim Waterer, Chief Market Analyst of KCM Trade, said in a Reuters report that now the energy market is worried about two straits.
The Bab al-Mandeb Strait could also become a hot spot like the Strait of Hormuz, as traders are closely monitoring the number of shipping in the Red Sea. Bab al-Mandeb, located at the southern entrance to the Red Sea, has become a very important route for Saudi Arabia’s crude exports. This is because the traffic through the Strait of Hormuz has decreased rapidly since the ceasefire between America and Iran was broken at the beginning of this month.
Prices may increase further
Three oil tankers carrying Saudi crude for China and India took a U-turn in the Red Sea on Tuesday and headed towards the Suez Canal instead of the risky route off the Yemeni coast. Frank Walbaum, market analyst at trading platform Naga.com, said in a Reuters report that tankers had to change their route due to the Houthi threat. This may put further pressure on the physical market and Saudi exports, due to which prices may increase further. In response to threats from Houthi rebels, Asian refiners are trying to source crude from Saudi Arabia’s Yanbu port on the Red Sea via the Suez Canal and Africa.
American inventory increased
Although oil stocks have declined around the world during the conflict, recent data from the US shows that inventories are increasing slightly. According to market sources, data from the American Petroleum Institute showed that the inventories of crude oil and distillates increased in the US last week, while the stocks of gasoline decreased. This inventory data came out before the official data from the US Energy Information Administration on Wednesday.
Leave a Reply