Oil prices rise amid attacks on tankers and cuts to U.S. production

Oil prices rose on Thursday, October 8, amid concerns about supplies from a key production region in the Middle East, as well as attacks on vessels in the Persian Gulf and the Strait of Hormuz. This came as the United States cut production due to the hurricane threat to offshore operations. UNN reports this, citing Reuters.

Details

Brent crude futures rose by $2.28, or 2.28%, to $102.28 per barrel at 04:27 GMT (07:27 Kyiv time). U.S. West Texas Intermediate (WTI) crude futures rose by $1.66, or 1.88%, to $89.94.

Prices fell on Wednesday after the International Energy Agency (IEA) agreed to accelerate the release of oil reserves and prioritize diesel fuel supplies under a plan launched in March, as governments seek to address record fuel prices and supply disruptions caused by the war with Iran.

Attacks on tankers in the Strait of Hormuz have increased

However, threats to oil shipments in the Persian Gulf and the Strait of Hormuz, through which around 20% of the world's oil and fuel volumes passed before the war, increased in October, as the U.S.-Israeli conflict with Iran has continued for an eighth month.

The number of attacks on tankers passing through the Strait of Hormuz reached its highest level last week compared with any week since the start of the war with Iran, as producers in the Persian Gulf increased exports. The expansion in the scale of the attacks is taking place amid increased oil production in the Persian Gulf, but with higher costs and risks for cargoes and crews.

During the latest attack, a tanker north of Qatar was hit by several projectiles, resulting in casualties, the British Maritime Trade Operations agency (MST) reported.

"The frequency of Iranian attacks on vessels is now at its highest level since the start of the war and is likely to intensify further," said Saul Kavonick, head of the energy division at MST Marquee.

What prices are forecast

The expert noted that "limited product supplies, extremely high logistics costs and the high likelihood of escalation by Iran are supporting prices at elevated levels."

ANZ analyst Daniel Hynes said in a note on Thursday that the IEA's oil release would likely consist of barrels that were already part of the organization's initial plan for 400 million barrels at the beginning of the conflict in the Middle East, meaning it probably does not represent an additional reduction.

"Ultimately, the release of strategic reserves may temporarily increase supply flows, but it does not create new production capacity," Hynes said.

Hurricane threat

Prices are also rising because of supply cuts, as a hurricane moves toward offshore oil production areas in the United States, the world's largest oil producer, forcing companies to shut down their platforms.

Shell and Chevron said on Wednesday that they were curtailing offshore operations in the Gulf of Mexico due to the approaching Hurricane "Isaias" (Isaias).

Overall, according to the U.S. Bureau of Ocean Energy Management, as of Wednesday, American oil and gas producers in the Gulf of Mexico had suspended approximately 25.08% of current oil production and 16.37% of current natural gas production due to the storm.

Data on oil inventories in the United States, the world's largest oil consumer, supported prices as oil inventories fell more than expected, while diesel fuel inventories declined slightly.