Oil steadies near two-month low as 37 Hormuz ship attacks test Iran truce hopes
Oil prices steadied on Wednesday near the previous session's two-month lows, as traders balanced hopes for a de-escalation in the US-Israeli war with Iran against persistent attacks on shipping in the Strait of Hormuz.
Brent futures rose 19 cents, or 0.2%, to $91.68 a barrel at 0911 GMT, while US West Texas Intermediate crude slipped 6 cents, or 0.1%, to $85.98. Prices had initially fallen more than $3 a barrel in the previous session after US officials played down the need for further military strikes against Iran, before paring losses when an Iranian security official said no talks were taking place between the two sides.
The waterway shows little sign of calming. Thirty-seven ships were attacked in October, the highest monthly total since the war began, according to data from the Washington Institute for Near East Policy. The United Kingdom Maritime Trade Operations agency said on Tuesday that a tanker was struck northeast of Lima in Oman, and Iran's Revolutionary Guards Navy said separately that two tankers caught fire after hitting naval mines on an "unauthorized route" in the strait.
"There has been an increase of vessel attacks in the Gulf shipping lanes amidst uncertainty of the diplomacy talks," said June Goh, senior analyst at Sparta Commodities. "With the US midterms well over and more crude flows out of the Middle East, there seems to be more bearish tones to the oil price." She added that the key driver for the market was whether Iran would engage with US demands to reach a diplomatic agreement.
Even a deal would not quickly restore normal traffic. "Even in the event a deal is struck, an increase in flows through the waterway would still depend on mine clearance, insurance costs and whether or not shipowners would even be willing to take the risk," LSEG Oil Research said in a November 10 note. On the supply side, US crude stocks rose by 9 million barrels in the latest week, market sources said, citing data from the American Petroleum Institute, with official figures due later on Wednesday. Separately, a regional governor said a drone attack caused a fire in the port area of Ust-Luga on Russia's Baltic coast, injuring three workers, while industry sources said Russian oil refining capacity has been reduced by about 30% since late October following renewed Ukrainian drone attacks.
