The Zhitong Finance App learned that as the war between the Middle East and Russia and Ukraine once again escalates, the prospects for crude oil supply to return to normal are even bleak. Oil prices stabilized after a sharp rise last Friday. As of press release, Brent crude oil futures fell 0.62% to 109.01 US dollars/barrel. The benchmark oil price broke through the 110 US dollars/barrel mark for the first time since May last Friday; WTI crude oil futures fell 0.65% to 98.38 US dollars/barrel.
Tension continues in the Middle East. On October 17, the Houthis in Yemen announced the shooting down of a Saudi “Apache” helicopter gunship near the Najran region on the border with Yemen in Saudi Arabia. On October 18, the Saudi-led multinational coalition confirmed that an AH-6i light helicopter crashed in the same area, but claimed that it was a technical failure and that 2 people on board died. Furthermore, the Houthis in Yemen attacked Yanbu, an important Saudi crude oil export hub.
Meanwhile, on October 17, the British Maritime Trade Operations Office issued two consecutive notices stating that two oil tankers were attacked in the waters off Jubail in Saudi Arabia on the same day. One of them was hit by an “unknown projectile” and the other was hit by a rocket. Iran's Revolutionary Guard Navy issued successive statements earlier on October 17, saying that the two supertankers exploded and caught fire after being hit by lightning in the Strait of Hormuz.
The weekly situation review released by the British Maritime Trade Action Office on October 16 shows that in the week up to that day, the agency had received a total of 12 reports of attacks on ships. Of these, 10 occurred in the Strait of Hormuz, while the other 2 occurred in the Persian Gulf and the Gulf of Oman, respectively. At the same time, the agency said that it is currently difficult to accurately count the actual number of ships attacked because most of the ships attacked refuse to report it to the agency.
Russia and Ukraine continue to launch tit-for-tat attacks on energy infrastructure. Ukrainian President Zelensky said on October 18, local time, that since US President Trump announced an “energy cease-fire,” Russia has carried out 76 attacks on the Ukrainian energy and oil and gas industry.
Furthermore, Trump previously stated that he reached a diesel export agreement with Russia and postponed further sanctions to maintain peace negotiations with Ukraine. However, US congressmen proposed a bill on Friday aimed at blocking this agreement, which was also criticized by Republicans.
On October 18, Russian Deputy Prime Minister Novak, who is in charge of energy, said that Russian diesel fuel will enter the US market within 15 to 20 days after signing the contract. The US Department of Energy has identified companies that will be counterparties and buyers. Commercial terms are currently being negotiated.
Since this year, Brent crude has soared by about 80% as growing hostilities between the two regions have rekindled supply concerns. The physical market continues to send signals of tight supply, and the rise in refined oil products such as diesel is even more intense. European diesel futures prices have more than doubled this year.
Jorge Leon, head of geopolitical analysis at Rystad Energy, said: “Increasing attacks on energy infrastructure and ships are weakening the market's hopes that crude oil flows can continue to recover. As the market increasingly takes into account the possibility that supply disruptions will continue for a longer period of time, the risks faced by oil prices this week are increasingly biased towards the upward trend.”
However, it appears that crude oil is still being shipped from the Persian Gulf region. The US side said over the weekend that its military helped escort more than 100 million barrels of crude oil through the Strait of Hormuz the previous week.