In a market analysis sent to Rigzone on Thursday, Mahmoud Mashal, Senior Market Analyst at VT Markets Dubai, highlighted that both WTI and Brent oil prices were rising intraday “as escalating tensions in the Middle East revived concerns over Gulf supply”.
At the time of writing, Brent was up more than three percent and WTI was up more than two percent from Wednesday settlements.
“Friction between Saudi Arabia and the Houthis has brought the kingdom’s energy infrastructure back into focus at a time when traffic through the Strait of Hormuz remains restricted,” Mashal said in the analysis.
“The U.S. decision to withdraw some diplomatic staff from Saudi Arabia, alongside troop movements in the region, has reinforced concerns that the conflict could broaden,” Mashal warned.
“Shipping risks remain persistent, threatening operations that have helped exporters work around restrictions. Disruptions to alternative channels would make it harder for Gulf producers to maintain current export flows and could add significantly to supply concerns,” he added.
Mashal went on to note in the analysis that several buffers are limiting the upside potential of oil prices.Gulf crude exports have recovered significantly,” he pointed out.
“At the same time, the IEA is accelerating previously planned reserve releases, adding further supply to the market,” he added.“Developments involving Russia provide an additional source of relief,” Mashal said.
“Prospects for progress in Russia-Ukraine talks, together with Washington’s waiver of several Russia-related sanctions, including a temporary license allowing Russian diesel to be sold on global markets until April 2027 and a waiver of secondary tariffs affecting major buyers of Russian crude such as China and India, could improve the availability of Russian crude and diesel,” Mashal continued.
Looking ahead, Mashal projected in the analysis that crude “is likely to retain an upside bias while Middle East supply routes remain exposed”.
“An escalation affecting Saudi energy infrastructure, Gulf loadings, or alternative shipping routes could push prices above their recent range,” he noted.
“Conversely, credible progress towards reopening Hormuz or a breakthrough in Russia-Ukraine negotiations would improve the supply outlook and place selling pressure on prices,” he said.
In another market analysis sent to Rigzone today, Naeem Aslam, CIO at Zaye Capital Markets (ZCM), noted that ZCM believes the renewed oil price increase “reflects growing concerns about Middle Eastern supply disruptions, persistent geopolitical uncertainty, and tightening global petroleum inventories”.