Oil prices saw a slight dip today but remain on track for a weekly gain, driven by supply concerns in the Middle East and a significant drop in US crude stockpiles. Brent crude futures fell 50 cents, or 0.47%, to $105.42 a barrel, while US West Texas Intermediate (WTI) crude futures dropped 49 cents, or 0.50%, to $97.48. Despite the daily decline, Brent has risen 0.49% this week, and WTI has surged 5.91%.
The market is pricing in a risk premium due to uncertainty over Middle East supplies and the sustainability of oil flows through the Strait of Hormuz. ING analysts noted that a US-Iran agreement is needed to restore confidence in the region's oil flows. Attacks around the Strait of Hormuz have surged, with Iran responding to US sanctions and blockades. Ship tracking firm Kpler reported that Hormuz clearance averaged 11.62 million barrels per day over the past week, down from a baseline of 17.15 million bpd.
Tensions in the region escalated further as the Houthis attacked the presidential palace in Aden, killing two guards, and the Saudi-led coalition reported dozens of attacks on Saudi infrastructure. The International Energy Agency announced a release of over 20 million barrels of diesel to ease market pressures, but investors remained unsatisfied. Haitong Futures suggested that easing Middle East tensions would be the most effective way to cool the oil market.
Meanwhile, the Trump administration is considering lifting sanctions on shadow fleet vessels carrying oil from Russia, Iran, and Venezuela to cut global freight rates. This move follows the temporary lifting of sanctions on Russian diesel fuel, which drew criticism from Ukrainian President Volodymyr Zelenskiy and European countries.