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Oil Nears $100 Per Barrel as Renewed Supply Crunch Looms

From ThisDay · () English

Summarized by DistantNews. Read the original for the full story.

At a glance

News Named sources Ongoing story
  • Brent crude rose above $98 a barrel as renewed US-Iran hostilities heightened fears of a supply disruption.
  • Analysts warned prices could reach $120 if attacks on shipping widen, while oil reserves outside China have fallen by more than 400 million barrels since the conflict began.
  • Chinese buyers have returned to Iraqi and Saudi crude after struggling to source enough Russian and Iranian oil, adding to pressure on the market.

Oil prices moved close to $100 a barrel as fresh fighting between the United States and Iran revived fears of a renewed supply crunch. Brent crude rose above $98 during the day, its highest level since late July, after US strikes on three Iranian crude tankers followed Iranian missile attacks on two US Navy warships.

The escalation continued on Monday with an attack on Saudi Aramco oil facilities in Jizan, Saudi Arabia, the Financial Times reported. Arne Lohmann Rasmussen, chief analyst at Global Risk Management, called the development “a significant escalation.” Markets will now watch for disruption to oil-shuttling services, including ship-to-ship transfers outside the Gulf that have supported oil supplies in recent months.

This represents a significant escalation.

· Arne Lohmann RasmussenThe Global Risk Management chief analyst described the latest attacks and warned that markets would watch for disruption to oil-shuttling services.

Brent had fallen from a war-driven peak of $126 a barrel in late April to just above $70 in early July, after a ceasefire between Washington and Tehran raised hopes of lasting peace. Prices have since climbed as renewed hostilities damaged those hopes. Analysts are also concerned that strategic reserves are being depleted.

if shipping attacks broaden and intensify

· Daan StruyvenThe Goldman Sachs commodities researcher said Brent could reach $120 a barrel under that scenario.

Daan Struyven, co-head of global commodities research at Goldman Sachs, said Brent could reach $120 “if shipping attacks broaden and intensify.” Energy Aspects said commodity funds were turning bullish because global reserves appeared to be approaching a tipping point. The consultancy said reserves outside China had dropped by more than 400 million barrels since the war began, while oil held in tankers at sea stood at multiyear lows.

China has also returned to the market, according to Sparta Commodities analyst June Goh. Chinese buyers had cut purchases by a third early in the war and drawn down reserves, but they are now buying Iraqi and Saudi crude because Russian and Iranian supplies are insufficient. One major oil-trading executive said prices would continue rising, with the key question being whether the increase would come slowly or suddenly. US wholesale diesel has already traded above $100 a barrel.

will continue to move higher

· Unnamed executive at a major oil trading firmThe executive said prices were likely to keep rising as buyers faced tightening supply.
About this summary

Originally published by ThisDay. Summarized and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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