Brent crude oil prices climbed to near $100 a barrel after Saudi Arabia announced attacks that halted operations at several energy facilities in the south of the kingdom.
The global benchmark crude oil price was just a dollar away from the $100 per barrel mark after rising last week amid escalating attacks in the Middle East and increased purchases by China, the world's largest importer.
The official Saudi Press Agency (SPA) reported that the attacks occurred on Tuesday, resulting in injuries to several people. Meanwhile, the Saudi-led coalition supporting the legitimate government in Yemen announced that the Houthi group targeted civilian and economic facilities in the Saudi cities of Abha, Khamis Mushait, Jazan, and Najran.
Targeting Saudi Arabia, the largest producer in OPEC, increases fears that supply disruptions from the Iran war will continue, as global stockpiles decline rapidly and prices for refined fuels, such as diesel, jump worldwide.
Brent crude has risen by more than 60% since the beginning of the year, while the benchmark price for diesel in Europe is approaching $200 a barrel.
Goldman Sachs sees upside risks as shipping disruptions spread
Goldman Sachs analysts, including Dan Stroeven, wrote in a note: Markets are increasingly pricing in a prolonged conflict in the Middle East, and they slightly raised their oil price forecasts assuming shipping disruptions continue until 2027.
They added: The risks surrounding our price forecasts remain heavily skewed to the upside.
In addition to tensions in the Middle East, oil traders are increasingly focusing on the prospects for refined fuels.
Russell Hardy, CEO of Vitol Group, one of the world's largest commodities trading firms, said at a conference in Singapore on Tuesday that refined product markets are showing increasing signs of tight supply. He attributed this in part to the loss of about 2 million barrels per day of exports from the Middle East, in addition to another 2 million barrels per day from Russia as a result of Ukrainian drone attacks.
Hardy estimated oil flows through the Strait of Hormuz at about 10 million barrels per day, roughly half of pre-war levels, but added that it was difficult to determine an exact figure, and that these quantities did not necessarily come out daily.
Regarding the Strait of Hormuz, Iran indicated on Monday that an agreement with Oman was imminent, which would include a temporary safe passage through the waterway. This raises questions about how the United States will respond after targeting Iranian tankers over the weekend. Tehran also warned that ships are at risk of being targeted near Oman, along the route the United States uses to assist vessels transiting the strait.
Separately, China's crude oil imports rose in August, driven by a slight increase in shipments from the Arabian Gulf and increased purchases by refiners from other sources, according to customs data released Tuesday. This surge in imports allowed Beijing to export more refined petroleum products, easing some of the pressure on global markets.
Oil flows through the Strait of Hormuz continue
Despite the increased risks facing shipping, some quantities of oil still flow through the vital waterway.
U.S. Energy Secretary Chris Wright said last week that an average of about 8 million barrels per day leave the Arabian Gulf. Tankers often switch off their transponders to avoid detection.
Macquarie Group Ltd. said on Monday, citing conversations with clients, that around 7 million barrels per day of crude and refined fuel are passing through the Strait of Hormuz. This compares to pre-war levels of around 20 million barrels.
Meanwhile, industry traders and executives are gathering in Singapore for the Asia Pacific Petroleum Conference, which began on Tuesday.
Key topics are likely to include restricted crude flows through Hormuz, declining global inventories, and the outlook for Chinese demand.
Iran readjusts its stance towards US forces
Following the latest escalation in hostilities, Iran’s top security official, Mohsen Rezaei, said the operational posture toward U.S. warships and bases has been fundamentally readjusted.
He added in a post on the X platform that the United States had received a clear warning about Iran's missiles in recent days.
Chris Weston, head of research at Pepperstone Group Ltd, told Bloomberg: “We’ve seen a lot of twists and turns since late February, and every time we thought we were going somewhere, it all fell apart. We’re almost back at square one.”
Latest oil price movements
Brent crude futures for November settlement rose 2.1% to $99.04 a barrel at 9:21 a.m. London time.
The price of West Texas Intermediate crude oil futures jumped 3.2% from Friday's closing level to $94.40 a barrel.
It should be noted that Monday's trading will be recorded as part of Tuesday's transactions due to the market being closed for a holiday in the United States.
