Oil Prices Edge Up Amid Middle East Tensions and Supply Shifts

Oil prices edged higher on Tuesday, supported by lingering geopolitical risks in the Middle East, despite easing supply concerns due to strong regional exports and a G7 emergency stockpile release. Brent crude futures rose 27 cents, or 0.3%, to $100.59 a barrel, while US West Texas Intermediate crude gained 30 cents, or 0.3%, to $89.73 a barrel.

Shipping data revealed that crude exports from the region surpassed pre-war levels on several days in late September, as alternative routes and logistical adjustments helped maintain oil flows despite disruptions around the Strait of Hormuz. However, Priyanka Sachdeva, head of market insights at Phillip Nova, cautioned that this does not signal a full normalization of supply, noting elevated costs, insurance, routing, and security risks due to recent tanker attacks.

Gulf oil flows excluding Iran reached over 81% of pre-war levels in September, driven by a recovery in Saudi exports despite attacks on its oil infrastructure. Iranian exports, meanwhile, dropped to zero due to a US blockade. The G7’s decision to release 100 million barrels of diesel and crude from emergency reserves further eased supply concerns, though tensions persisted between Saudi Arabia and Houthi forces in Yemen.

The Houthis claimed attacks on Saudi airports and an Aramco refinery in Rabigh, though these claims could not be immediately verified. Analyst Vivek Dhar of Commonwealth Bank of Australia noted that low oil inventories and tight shipping markets kept market participants skeptical about sustained lower prices.