Oil Prices Climb as Middle East Tensions and Shipping Risks Rise

Oil prices edged higher on Tuesday as tensions in the Middle East raised concerns about supply disruptions. The geopolitical premium in the market was boosted by security worries, despite stable oil exports from the region and efforts by G7 countries to ease supply concerns.

Brent crude futures gained 27 cents, or 0.3%, to $100.59 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 30 cents, or 0.3%, to $89.73 per barrel. Analysts noted that while alternative routes have helped maintain oil supplies, attacks on tankers in the Strait of Hormuz have increased, keeping shipping costs and insurance risks high.

Priyanka Sachdeva, head of market analysis at Phillip Nova, pointed out that shipping data showed regional oil exports from Iran exceeded pre-war levels in late September. However, she cautioned that full normalization of supplies is still uncertain due to ongoing attacks and security risks. Meanwhile, oil shipments from Persian Gulf countries, excluding Iran, rose to over 81% of pre-war levels in September, partly due to the resumption of Saudi Arabian exports.

To address supply concerns, G7 countries agreed to release 100 million barrels of diesel and crude oil from emergency reserves. Despite this, analysts like Vivek Dhar from the Commonwealth Bank of Australia noted that low oil inventories and high shipping costs continue to pose risks to the market. The cost of shipping from the Persian Gulf to Asia has reached a record high, adding to the tensions in the oil supply chain.