Oil markets, like much of the world that depends on them, are being tugged between a supply that is still moving and a threat that has not yet passed. Brent crude climbed back toward $105 a barrel as attacks on tankers in the Strait of Hormuz, the narrow passage through which much of the world's oil must travel, thinned the traffic that carries it. The unease spread outward, reaching European diesel and gas prices, the bond markets that finance the continent's energy imports, and the American Gulf Coast, where a hurricane now threatens the refineries that turn crude into fuel. What happens nex
Oil Climbs Above $105 as Record Tanker Attacks Choke Hormuz Traffic to Two-Month Low
A tanker struck by multiple projectiles in the latest attack on Wednesday reported casualties, according to the UK Maritime Trade Operations agency.
A tug-of-war between improving supply and lingering threats
Mark
Why did oil jump on Thursday when more crude is actually leaving the Gulf?
Mimi
Because the risk is what's being priced. Ten tankers were hit between September 28 and October 4, a record, and the latest one reported casualties on Wednesday.
Luke
Careful, though. The ING note says supply from the region is improving. So prices are reacting to threat, not to a confirmed shortage.
Mark
And the seven-tanker count on Tuesday? That sounds dramatic.
Mimi
It's the lowest since July 23 and under half the weekly average. But it's preliminary Kpler data.
Luke
Right, and those counts often get revised up because ships go dark. So the two-month low may be overstated. We don't know by how much.
Mark
What does the hurricane add?
Mimi
Another threat on a separate front. Shell and Chevron are curtailing Gulf Coast production and evacuating nonessential staff as Hurricane Isais approaches.
Luke
Worth noting that's a warning about possible losses, not damage already done. Nothing here says refineries have been hit.
Mark
How much cushion is there?
Mimi
The IEA says about 1.1 billion barrels in public emergency stocks, over 200 million of them diesel, and 100 million more still to be released from the March pledge.
Luke
But the agency also said it won't add to the 400 million, and diesel rose 6% on that. The cushion exists; the market doubts it's enough. Casualty numbers from Wednesday's attack are still unreported.
Il Polso
- Ten tankers were struck in the Strait of Hormuz in a single week, and the attacks are now rattling oil markets from Asia to the Atlantic.
- Traffic through the waterway has collapsed to seven transits in a day, though dark ships with switched-off trackers may mean the real count is higher.
- Brent jumped more than five percent before settling near $105, while European diesel surged six percent and fears of inflation returned.
- The International Energy Agency will not add to its March release but has pledged to speed up the stocks already promised and holds reserves to act again.
- A hurricane bearing down on the US Gulf Coast refining hub, and a tanker struck with casualties, keep the market tense with no clear resolution yet in sight.
Oil markets, like much of the world that depends on them, are being tugged between a supply that is still moving and a threat that has not yet passed. Brent crude climbed back toward $105 a barrel as attacks on tankers in the Strait of Hormuz, the narrow passage through which much of the world's oil must travel, thinned the traffic that carries it. The unease spread outward, reaching European diesel and gas prices, the bond markets that finance the continent's energy imports, and the American Gulf Coast, where a hurricane now threatens the refineries that turn crude into fuel. What happens next depends less on any single barrel than on whether the risk to passage can be quieted.
On Thursday morning, the price of Brent crude, the global benchmark for oil, leapt more than five percent before settling at about $105 a barrel. The American benchmark, West Texas Intermediate, rose by a similar margin to $92.48. The cause was a string of attacks on tankers in the Strait of Hormuz, the narrow channel through which a large share of the world's oil must pass, and the attacks had thinned the traffic moving through it.
Shipping data from Kpler showed just seven tankers crossing the strait on Tuesday, less than half the weekly average and the lowest count since July. Those figures are preliminary, and the true number may be higher, because many vessels switch off their tracking systems to avoid detection. Kpler confirmed that ten tankers had been struck between September 28 and October 4, a record. The most recent attack, on Wednesday, hit a tanker with multiple projectiles and left people injured, though how many was not reported.
Still, more crude has been leaving the Gulf even as the attacks mount, and analysts at ING described a tug-of-war between improving supply and lingering danger. Prices, they said, will not settle lower until the risks themselves are resolved. Meanwhile, Hurricane Isaias is heading toward the US Gulf Coast, where Shell and Chevron have begun cutting production and moving nonessential staff out of the area.
The pressure reached well beyond crude. European gas prices neared their mid-September peak, and diesel jumped, reviving inflation worries and a fresh selloff in European bonds. The International Energy Agency said its members would not release additional stocks beyond the 400 million barrels agreed in March, but would speed up the releases still pending and stood ready to tap further reserves if needed. At the pump, American drivers had not yet felt the full force of the rise, with diesel at $6.28 a gallon and regular gasoline at $4.36. The coming days will show whether the storm, the attacks, and the agency's reserves move the market in one direction or another.
On Thursday morning, Brent crude, the global oil benchmark, jumped more than 5% at one point before settling back to trade 4.8% higher at $105 a barrel as of 8:30 a.m. Eastern. West Texas Intermediate, the US benchmark, rose by a similar margin to $92.48. The driver was a run of attacks on tankers around the Strait of Hormuz that has thinned out traffic through the waterway.
The numbers from Kpler, a shipping data firm, are stark. Just seven tankers crossed the strait on Tuesday, less than half the seven-day average and the lowest count since July 23. That figure is preliminary. Kpler's early counts are sometimes revised upward after ships have passed, because many vessels switch off their identification systems to avoid detection. These so-called dark transits are rising, which means the true count may be higher than the headline.
The attacks themselves are not in doubt. Kpler reported Thursday that 10 tankers were struck in the strait between September 28 and October 4, well above the previous weekly high of six. The latest incident came Wednesday, when a tanker reported being hit by multiple projectiles and the UK Maritime Trade Operations agency said there were casualties. The reports do not say how many people were affected.
The picture is mixed, because more crude has in fact been flowing out of the Gulf even as the attacks mount. Commodities strategists at ING described a clear tug-of-war between improving supply from the region and lingering threats to it. In a note Wednesday they wrote that prices will only trade sustainably lower if those risks are addressed.
A second source of pressure came from the weather. Hurricane Isais is heading toward the US Gulf Coast, the country's refining hub, raising the prospect of further supply losses. Shell and Chevron said they would curtail production in the region and evacuate nonessential personnel.
The effects spread beyond crude. European natural gas prices neared their mid-September high on Thursday before pulling back, and diesel climbed too. ICE Gasoil Futures, a benchmark for European diesel, closed 6% higher Wednesday. The rise stoked inflation fears and contributed to a renewed selloff in European bonds, given the continent's dependence on imported energy.
The diesel jump followed an announcement from the International Energy Agency. Its member governments will not add to the 400 million barrels of oil they agreed to release in March. About 325 million barrels have been released so far, with roughly 100 million still to reach the market, including the diesel release the G7 agreed last week. The Paris-based agency pledged to accelerate those releases. It added that member governments still hold publicly owned emergency stocks equal to about 1.1 billion barrels, including over 200 million barrels of diesel, and that it stands ready to release more if needed.
At the pump, the move had not yet fully arrived. According to AAA, average US diesel prices were slightly lower Thursday than the day before, at $6.28 a gallon, while regular gasoline was flat at $4.36. What to watch next is whether Hurricane Isais disrupts Gulf Coast refining, whether tanker attacks continue at this pace, and whether the IEA decides to tap its remaining stocks.
Citazioni salienti
The only way to see prices trade sustainably lower is for lingering risks to be addressed.— ING commodities strategists
The IEA stands ready to release more of these stocks to the market if and when required.— International Energy Agency
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