Middle East Tensions Keep Oil Prices Elevated
Oil prices rose on Monday due to a lack of progress in diplomatic efforts to resolve the Middle East conflict. Despite this, gains were limited by the absence of major supply outages.
Brent crude futures increased by $0.92 or 1.04% to reach $89.44 per barrel, while U.S. West Texas Intermediate crude futures rose by $0.55 or 0.67% to $82.95 a barrel. This comes after prices gained more than 5% last week following attacks on tankers in the Hormuz strait and a Saudi Aramco refinery.
Bjarne Schieldrop at SEB Research said that prices are unlikely to move significantly higher unless there is a halt in crude outflow through the Strait of Hormuz or a closure of the Bab el-Mandeb Strait. Frank Walbaum, market analyst at Naga.com, also stated that shipping restrictions and negotiations reaching a stalemate limit the potential for further decline.
The Strait of Hormuz saw restricted shipping over the weekend, with five vessels transiting on Saturday and none registered for Sunday. ADNOC sold at least 14 million barrels of spot crude to Asian refiners at premiums in its latest tender.