Oil gains over the week amid risks in the Strait of Hormuz — Asharq Al-Awsat

Global oil prices edged lower on Friday, but were heading for a weekly gain due to uncertainty over supplies from the Middle East and a larger-than-expected decline in US crude oil inventories. Asharq Al-Awsat reports.

As of 03:52 GMT, Brent futures fell by 71 cents, or 0.67%, to $105.21 per barrel. US WTI crude lost 77 cents, or 0.79%, and traded at $97.20 per barrel.

Weekly performance

Since the start of the week, Brent has risen by 0.44%, while WTI has gained 5.81%. The day before, WTI closed more than 3% higher after a significant drop in US oil inventories amid production shutdowns caused by a hurricane.

ING analysts noted that uncertainty in the Middle East and concerns over the stability of oil flows through the Strait of Hormuz had created a substantial risk premium in the market. In their view, an agreement between the United States and Iran could strengthen market confidence in continued supplies from the region.

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Flows through the strait

According to vessel-tracking company Kpler, the average volume passing through the Strait of Hormuz in the seven days to October 13 stood at 11.62 million barrels per day, or about 68% of the baseline level of 17.15 million barrels per day. Kpler analysts linked the sharp decline in oil flows from the Persian Gulf to intensified Iranian attacks and expect a slower and uneven recovery without a comprehensive political agreement.

International Energy Agency reserves

On Thursday, the International Energy Agency agreed to accelerate the release of the remaining volumes from reserves pledged in March, including more than 20 million barrels of diesel fuel. In March, member countries pledged to provide the market with more than 400 million barrels of oil and petroleum products, and by the time of the IEA's announcement, approximately 330 million barrels had already been released.

Sparta Commodities analyst Abhishek Kumar said the IEA announcement was a step in the right direction but lacked details the market had expected. In his assessment, more than 20 million barrels of diesel represent an acceleration of previously made commitments rather than new volumes.