Brent Crude Set for Weekly Rise

Brent crude prices rose above $103 a barrel on Friday, heading for a weekly gain, as escalating Middle East tensions and supply disruptions outweighed plans to release emergency reserves. Concerns about restoring physical oil flows through the Persian Gulf intensified after US Central Command confirmed that the Singapore-flagged container ship GFS Pride sank while being towed to shore after an Iranian projectile struck it in the Strait of Hormuz. Nevertheless, more than 40 vessels transited the strategic waterway over the previous 24 hours, indicating that some traffic continues. Meanwhile, IEA members pledged to release the remaining 100 million barrels from an emergency intervention launched in March, following pressure from US officials. Separately, reports say Washington is considering easing sanctions on certain vessels carrying Iranian, Russian or Venezuelan oil.

Brent crude traded above $105 per barrel on Friday and was on track for a weekly gain amid mounting supply concerns in the Middle East. The US Central Command confirmed that a Singapore-flagged container ship that sank in the Strait of Hormuz earlier this week was hit by an Iranian projectile, adding uncertainty over the recovery of physical oil flows and pushing tanker rates to record highs. Rising tensions between Saudi Arabia and Iran-backed Houthi forces in Yemen further heightened supply risks. Meanwhile, the IEA agreed to proceed with the release of the remaining 100 million barrels of oil from a coordinated intervention launched in March, following lobbying efforts by US officials. Elsewhere, EIA data revealed that US crude inventories dropped by 8.6 million barrels last week, marking their largest decline since February. Brent underperformed WTI this week as lower shipping costs for US crude boosted demand for American barrels.

Brent crude rose near $106 a barrel on Thursday amid mounting supply risks in the Middle East. Attacks on commercial vessels in the Strait of Hormuz sank a Singapore-flagged container ship, pushing tanker rates in the Persian Gulf to record highs. The US military has reportedly drawn up plans for new strikes on Iran, potentially involving the MOAB, the largest non-nuclear explosive device in the US arsenal. Iran said it was “counting the moments” until it could strike US warships. Prices were also supported by an 8-million-barrel US inventory draw in the week ended October 9th. The IEA warned that tight diesel markets could persist into next year, while attacks on Saudi Arabia threatened to disrupt the recovery in oil supply. Meanwhile, the US is reportedly considering easing sanctions on “shadow fleet” vessels transporting Russian oil and petroleum products to help ease global supply pressures.