Oil Prices Inch Up as Middle East Tensions and Export Data Clash

Oil prices saw modest gains on Tuesday, as geopolitical tensions in the Middle East offset concerns over stable crude exports from the region. Brent crude futures rose by 27 cents, or 0.3%, to $100.59 a barrel, while US West Texas Intermediate (WTI) crude futures climbed 30 cents, or 0.3%, to $89.73 a barrel.

Despite recent attacks around the Strait of Hormuz, shipping data indicates that regional crude exports have surpassed pre-war levels on several occasions in late September. Priyanka Sachdeva, head of market insights at Phillip Nova, noted that while exports continue, the risks associated with shipping, such as elevated costs, insurance, and security, remain high. Gulf oil flows, excluding Iran, reached over 81% of pre-war levels in September, driven by a rebound in Saudi exports.

The G7's decision to release 100 million barrels of diesel and crude from emergency reserves further eased supply concerns. However, ongoing conflicts between Saudi Arabia and Iran-backed Houthi forces in Yemen continue to threaten regional stability. Saudi-backed Yemeni forces launched an offensive to retake key coastal areas, while the Houthis claimed attacks on Saudi infrastructure, including an Aramco refinery in Rabigh.

Analysts warn that low oil inventories and record-high shipping rates between the Gulf and Asia underscore the tightness in the oil supply chain, limiting the potential for sustained price declines.