Oil prices advanced again on Tuesday, with Brent hovering around a five month high as traders priced a geopolitical risk premium from Houthi attacks on Saudi infrastructure and reports of vessel attacks in the Gulf. Brent futures climbed 55 cents, or 0.50 percent, to 110.10 dollars a barrel by 03:19 GMT, after rising as high as 110.70 dollars in the previous session to their highest since May 20. Monday’s settlement in the market tables was higher still, at 111.33 dollars, up 1.62 percent on the day and 5.34 percent on the week, while WTI settled at 100.63 dollars, down 2.92 percent on the day as its November contract approached expiry, with the more active December contract at 98.93 dollars early Tuesday.
The physical backdrop has not improved. At least 18 vessels were reportedly attacked over two weeks, Kpler said in a note on Monday, and the analytics firm has put the daily average flow of oil out of the Persian Gulf at about 8.5 million barrels, down from more than 20 million barrels a day two weeks earlier. “Oil prices remain well-supported amid ongoing tensions in the Middle East despite relatively strong Persian Gulf flows,” ING analysts Warren Patterson and Ewa Manthey wrote. “This suggests the market is pricing in a significant risk premium, given the situation’s volatility. Clearly, there are no signs of this yet,” they said of any erosion in that premium.
Yemen’s Iran-aligned Houthis said on Monday they had launched attacks on Saudi energy, airport and military targets, including an Aramco site in Yanbu, the Shaybah oilfield, Riyadh’s King Khalid International Airport and Abha airport. Saudi authorities did not immediately confirm the claims and Reuters could not independently verify them; the claims are carried here as the group’s own account. A separate Houthi attack on a training camp in Yemen’s Shabwa province killed 58 people, with more than 200 injured.
The policy offsets that softened prices a day earlier are losing traction. Friday’s executive order waived key Russia related sanctions and tariffs, but President Trump said on Saturday he had yet to announce a final decision, and Secretary of State Marco Rubio said officials wanted more time to evaluate. “While the prospect of additional Russian diesel supply offers some theoretical relief, traders appear far more focused on the ongoing risk of further damage to energy infrastructure across the Gulf region,” said Tim Waterer, chief analyst at KCM Trade. In the United States, crude stockpiles were expected to have fallen last week along with product inventories, a preliminary Reuters poll showed on Monday. The International Energy Agency said last week that Russia’s crude production rose by 65,000 barrels a day in September to 8.43 million barrels a day, still about 870,000 barrels a day below a year earlier.