WTI, Brent, Saudi pipeline attack, Middle East war
A maze of crude oil pipes and valves is seen during a tour of the Department of Energy’s Strategic Petroleum Reserve in Freeport, Texas.
Richard Carson | Reuters
Oil prices rose on Friday as tensions around the Strait of Hormuz deepened, with a vital shipping lane still largely closed despite a ceasefire agreement between the United States and Iran.
West Texas Intermediate crude oil futures for May delivery rose 0.55% to $98.33 per barrel. International benchmark Brent crude futures for June delivery rose more than 1% to $96.91 a barrel.
US President Donald Trump on Thursday warned Iran to “stop immediately” if it is charging tankers transit fees through the strait; It’s a move that risks undermining the 2-week ceasefire agreement that is contingent on reopening the waterway.
Shipping flows through this strait, which supplied approximately 20% of global oil supply before the war, were severely restricted, keeping markets on edge.
“Iran is doing a very bad and, some would say, dishonorable thing by allowing oil to pass through the Strait of Hormuz.” Trump said In a Truth Social post.
Trump’s chief economic adviser, Kevin Hassett, said Thursday that even one oil tanker passing through the strait would provide “a large portion of the shortage.”
Additionally, attacks on Saudi Arabia’s energy infrastructure have also affected its oil production capacity.
The strikes reduced oil production capacity by approximately 600,000 barrels per day and reduced flows on the East-West Pipeline by approximately 700,000 barrels per day. According to the Saudi Press AgencyQuoting a source from the Department of Energy.
Oil prices since the beginning of the year
Iranian attacks hit a pump station on the East-West pipeline, according to a report by the state news agency. The pipeline carries crude oil from processing facilities near the Persian Gulf to the Red Sea export terminal in Yanbu.
Riyadh has focused on the pipeline as its main export route during the conflict, as Iranian attacks have made shipments through the Strait of Hormuz increasingly unsustainable.
Meanwhile, separate attacks on Saudi Arabia’s Manifa and Khurais oil fields have reduced the kingdom’s production by about 600,000 barrels per day, the Saudi Press Agency said. The targeting of many refineries in the recent strikes further increased supply disruptions.
The United States reached a 2-week ceasefire agreement with Iran on Tuesday in exchange for Tehran allowing ships to pass through the strait. The waterway remains largely closed to shipping, the chief executive of the United Arab Emirates’ state oil company said on Thursday.
With Gulf imports falling below 2 million barrels a day and journey times extending by several weeks, Goldman analysts said buyers may need to rely on stockpiles and alternative supplies for at least another month, even as higher fuel prices begin to weigh on demand.
— CNBC’s Justina Lee and Spencer Kimball contributed to this report.
