Oil Prices Slip Despite New Attacks Across the Middle East
Crude oil prices ticked lower today on reports that oil tankers were still passing through the Bab el-Mandeb Strait, despite information about renewed strikes between the U.S. and Iran, and a drone attack on a tanker in an Egyptian port.
At the time of writing, Brent crude was trading at $89.46 per barrel, with West Texas Intermediate at $83.54 per barrel, both down by about 1% since Wednesday's close.
Meanwhile, the U.S. Central Command announced renewed strikes on targets in Iran on Wednesday, saying "The strikes are a powerful response to yesterday's attempted Iranian attacks on U.S. forces based in the Middle East," as quoted by Reuters.
Iran, for its part, fired missiles at U.S. troops in Jordan, while U.S. and Saudi forces attacked Iran-aligned military groups in Iraq, which were reported to have been planning to strike Saudi energy infrastructure. Egypt confirmed reports about a drone strike on a U.S.-owned tanker used for floating storage at the port of Damietta. Later reports mentioned two tankers, both of them for liquefied natural gas—Damietta is a key LNG terminal in Egypt.
Yet traders are choosing to focus on reports about tankers making their way out of the Middle East, with ship-trackers noting 39 commodity carriers exiting the Bab el-Mandeb Strait on Tuesday, even as traffic via the Strait of Hormuz remains subdued.
"While overall volumes are reduced, oil continues to leak out of the region through multiple channels, and additional workarounds are being explored. The longer this situation persists, the more these alternative routes and methods will erode Iran's leverage over the Strait of Hormuz," IG Group analyst Tony Sycamore said, as quoted by Reuters.
"Clearly, with Saudi oil infrastructure increasingly targeted, the risk of more prolonged supply disruptions grows," ING commodity strategists wrote in a note on Wednesday, noting that this risk was especially pronounced in middle distillates and that crack spreads are still breaking records.
By Irina Slav for Oilprice.com
