Oil Rallies 30%, Supply Risks Explode
Oil prices continued their rally on Wednesday (July 22nd) after the United States and Iran both dismissed the prospect of imminent peace talks. The risk of global supply disruptions continues to rise, raising market concerns about the stability of energy flows.
The September Brent contract rose 3.1% to US$93.81 per barrel, approaching US$94. Meanwhile, the September WTI contract strengthened 3% to US$87.26 per barrel. This month's oil rally is now approaching 30% amid escalating tensions in the Middle East.
Iran stated that there are currently no direct negotiations, and only an exchange of messages is still possible. This statement came after US President Donald Trump asserted that he would respond if the Iran-backed Houthi group disrupts shipping in the Red Sea.
The US military also continued its 11th day of attacks on Iran to weaken Tehran's ability to threaten commercial shipping in the Strait of Hormuz. Although the waterway remains open, three tankers were reportedly attacked in recent days around Hormuz near Oman.
The Houthi threat to Saudi Arabian shipping lanes is beginning to have an impact. Several tankers were seen temporarily stopping as they approached Yemeni waters, while other vessels carrying Saudi oil were turning back towards the Suez Canal. Commercial shipping traffic around Hormuz also fell to its lowest level in three weeks.
Supply pressures are not only coming from the Middle East. The market is also monitoring the attack on the Caspian Pipeline Consortium terminal on Russia's Black Sea coast, a key shipping route for the bulk of Kazakhstan's crude oil. This situation is heightening concerns about global supply.
As a result, oil prices have the potential to remain strong as long as the risks in Hormuz, the Red Sea, and the Black Sea persist. The widening backwardation structure of Brent and WTI, which is more than US$3 per barrel, indicates that the market is beginning to price in short-term supply risks. If the conflict continues and OECD commercial stocks deplete, Brent could potentially break US$100 per barrel, although a technical correction could still emerge due to the already aggressive rise. (arl)
Source: Newsmaker.id
