Cyclone Pushes Up Global Oil Prices
Oil prices have gone up in the international market because a cyclone has disrupted oil production in the US Gulf of Mexico region. At the close of trading yesterday, the price of Brent crude reached $104.72 per barrel. At the same time, the price of US West Texas Intermediate (WTI) oil rose to $91.85.
According to a report by the news agency Reuters, Brent crude rose by 44 cents, or 0.42 percent, yesterday. WTI rose by 36 cents, or 0.39 percent. Both types of crude oil were on track for a weekly gain.
Cyclone Isaias is moving toward the US Gulf of Mexico region. For safety, oil companies have shut down production at several sites. Data from the US Bureau of Safety and Environmental Enforcement shows that about 1.283 million barrels of crude oil per day were shut in as of the day before yesterday. This is about 62.9 percent of the daily output of the region. The shutdown has raised concerns about supply.
Oil prices had fallen early in yesterday’s trading. US President Mr. Donald Trump called the talks with Iran on ending the war “fruitful.” He also said the US has no plan to attack Iran before the midterm election next month. His remarks eased fears of disruption to oil supply from the Middle East to some extent.
China, the world’s largest oil importer, also plans to restart exports of refined fuel after a short pause. The exports had stopped during the Golden Week holiday in China. If exports restart, the supply of diesel, petrol and jet fuel in the international market may grow. This has also put downward pressure on oil prices.
Meanwhile, concerns about the safety of ships in the Persian Gulf and the Strait of Hormuz made the oil market unstable this week. Before the war, about 20 percent of the world’s oil and fuel moved through the Strait of Hormuz. If ship movement on this route is disrupted, it may badly affect international fuel supply.
Iran’s Tasnim news agency quoted Iranian Foreign Minister Mr. Abbas Araghchi. He said Iran is reviewing the reply to Tehran’s proposal to reopen the Strait of Hormuz within seven days. Meanwhile, Washington keeps up economic pressure on Tehran. It has put sanctions on people, networks and 17 ships linked to the transport of Iranian crude oil, refined fuel and petrochemicals.
Along with the Iran war, the Russia Ukraine conflict is also affecting the supply of petrol, jet fuel and especially diesel. Production disruption from the cyclone, geopolitical tension and the chance of China restarting exports all add up. As a result, prices in the international oil market keep rising and falling.
