Oil Prices Plummet Amid Saudi Arabia Attacks and US Diesel Export Ban
The oil market experienced significant volatility this week due to various factors, resulting in a $12/bbl Hi/Lo spread for WTI crude. The price of October WTI reached its high on Monday at $101.10/bbl and its low on Wednesday at $88.70. In contrast, Brent crude saw a more moderate fluctuation, reaching its high on Thursday at $108.25/bbl and its low on Tuesday at $97.35.
The discrepancy between WTI and Brent prices has grown to $11.70 due in part to the US diesel export ban, which makes domestic crude less desirable. Saudi Arabia reported that oil flows through their East-West pipeline have resumed, but Houthi rebels continue to launch attacks on the country's infrastructure, including near Riyadh.
The Yemen-based rebel group has also targeted Saudi Aramco facilities at the port of Yanbu and the terminus for the East-West oil pipeline. France has pledged to send aid to help protect this key port and refinery. The Kingdom's military has intercepted several missiles launched by the Houthis, but the situation remains uncertain.
The International Energy Agency (IEA) reported that global oil inventories have dropped by 507 million bbl since the start of the Iran war. Estimates suggest another 95 million bbl decline for August. Meanwhile, the Energy Information Administration's (EIA) Weekly Petroleum Status Report indicated a slight increase in commercial crude oil inventories last week.