By: Karim Hammam
Global oil prices rose in Tuesday's trading, with Brent crude nearing its highest level in five months, driven by renewed concerns over supply disruptions amid ongoing geopolitical tensions. Brent crude futures rose by about 0.47 percent to reach $110.07 a barrel, after climbing in the previous session to $110.70, the highest level since last May. In the same context, U.S. West Texas Intermediate futures for November delivery saw a 0.36 percent increase to reach $104.03, while the more actively traded December contracts rose to $98.80.
Risk premium and price support
Analysts believe the market is still factoring in a significant risk premium due to the uncertainty dominating regional and international conditions. Data from Kpler, a company specializing in tracking oil tanker movements, indicated that at least 18 ships have been attacked in recent weeks, contributing to oil prices staying above the $100 a barrel barrier. Concerns regarding the stability of energy supplies continue due to fluctuating navigation and escalating tensions in the Middle East, especially with threats related to the Strait of Hormuz.
Officials' positions on energy supplies
In this framework, Iranian First Vice President Mohammad Reza Aref emphasized the need to protect the country's security by imposing control over the Strait of Hormuz, pointing to his country's ability to ensure safe passage for friendly nations and holding the United States responsible for the current situation. Relatedly, U.S. Energy Minister Chris Wright explained that crude oil exports from the Gulf region have managed to recover to reach about 80 percent of their pre-conflict levels, despite the continuation of restrictions imposed on refined petroleum product shipments.
Geopolitical impacts on the markets
The current year has witnessed a significant surge in oil prices by about 80 percent, reflecting the intensity of prolonged conflicts in the Middle East and Eastern Europe, which have directly led to the disruption of global energy supply chains. Refined petroleum products, especially European diesel, continue to record sharp increases, amidst market anticipation of the extent to which energy infrastructure can withstand repeated attacks, keeping the probabilities of price volatility at high levels in the near term.
