(March 17): Oil rebounded on Tuesday after the first drop in almost a week, as Iran pressed on with attacks on energy infrastructure around the Middle East.
Brent rallied above US$103 ($131.75) a barrel, after slipping almost 3% on Monday, while West Texas Intermediate (WTI) was around US$97. Operations were suspended at the Shah gas field in the United Arab Emirates (UAE), while an Iraqi oil field was also targeted by drones and missiles. Crude loadings from the UAE’s port at Fujairah were again halted, according to a note from Inchcape Shipping Services.
The strikes further hampered the outlook for global energy supplies as the war enters its third week, with a near-complete halt of shipping through the Strait of Hormuz starting to impact consumers, especially in Asia. Oil has risen more than 40% since the war started, but prices declined on Monday as the US prepared to release the first tranche of emergency crude reserves.
“There is a push and a pull constantly dragging the market higher and lower,” Rebecca Babin, a senior energy trader at CIBC Private Wealth Group LLC, told Bloomberg TV. “This is a market with about 100 stories running at once that’s frantically trying to determine how much supply is off the market.”
US President Donald Trump threatened to expand strikes on Kharg Island to target oil infrastructure after last weekend sparing energy assets on the key Iranian export hub. He also said Washington is “hammering” Tehran’s capacity to threaten commercial shipping through the Strait of Hormuz, and reiterated his appeals for help from other nations to secure passage.
Washington is allowing Iran to continue shipping crude via the waterway, Treasury Secretary Scott Bessent told CNBC.
See also: Goldman Sachs warns oil’s biggest shock will hurt fuels most
In the Middle East, the UAE and Kuwait have both reduced oil output further. Saudi Arabia is racing to boost exports through an alternative route that bypasses Hormuz.
Transit through the strait is likely to become “increasingly conditional”, with Iran permitting passage for some vessels depending on their affiliation, JPMorgan Chase & Co analysts including Natasha Kaneva said in a note.
See also: Iran strikes gulf oil hub as allies resist Trump’s Hormuz plan
The number of Iranian ships crossing the waterway jumped to a wartime high on Monday, according to data compiled by Bloomberg. That included an oil tanker headed for China.
“The biggest risk in the market is the Strait of Hormuz remaining constrained for a longer stretch and the market feeling the US and its allies have a limited capacity to alter the dynamic,” said Chris Weston, the head of research at Pepperstone Group in Melbourne.
On Monday, Trump said he had asked China — among those he has asked for support in Hormuz — to delay a summit with counterpart Xi Jinping for about a month, saying it is important for him to remain in Washington to oversee the war.
Prices:
- Brent for May settlement had advanced 2.9% to US$103.11 a barrel at 6.02am in London.
- WTI for April delivery rose 3.3% to US$96.63 a barrel.
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