Oil Prices Rise on US-Iran Tensions and Strong Demand
Oil prices continued their upward trend for a second day as uncertainty surrounding US-Iran talks and strong demand outweighed the resumption of Saudi Arabia's East-West pipeline flows.
The Brent crude price traded above $107 per barrel, while West Texas Intermediate (WTI) was around $94. Iranian officials have expressed pessimism about reaching a deal to end hostilities with Washington before US midterm elections in November, following President Donald Trump's rejection of a proposal to resume full traffic through the Strait of Hormuz in seven days.
Saudi Arabia has restored half the flows through its East-West pipeline after drone strikes halted operations earlier this month. Flows through the link to the Red Sea have reached at least 3.5 million barrels per day, according to people familiar with the matter.
‘There’s still enormous geopolitical risk, but the market has learned that barrels keep finding a way out,’ said Haris Khurshid, chief investment officer at Karobaar Capital LP. ‘We’re not seeing the kind of sustained repricing you’d expect if traders thought physical supply was about to deteriorate materially.’
Crude prices are headed for a third monthly gain due to escalating US-Iran tensions, disruptions to the Saudi bypass route, and potential diesel export curbs by Washington. Brent is up more than 70% this year after seven months of conflict in the Middle East.