Brent Holds Near US$100, Supply Risks Still Loom
Oil prices weakened in trading on Friday (July 24th), but remained on track for a sharp weekly gain. Brent fell US$1.12, or 1.11%, to US$99.55 per barrel at 06:48 GMT, after closing 7% higher above US$100 the previous day for the first time since May.
Meanwhile, West Texas Intermediate, or WTI, fell US$1.12, or 1.21%, to US$91.06 per barrel. Despite the correction, Brent is still headed for a weekly gain of around 13%, while WTI is on track for a weekly gain of around 10.4%.
Supply pressure remains a major market concern after the Iran-aligned Houthi group claimed responsibility for attacks on two Saudi oil tankers in the Red Sea. ING analysts assess the current risk of supply disruption as the greatest since the war, as oil flows through the Strait of Hormuz have nearly dried up and the risks to Saudi supplies from the Red Sea are becoming increasingly apparent.
Ship tracking data from Kpler shows the number of tankers passing through the Strait of Hormuz fell to just one vessel on Thursday, the lowest since May 7. Furthermore, the Bab el-Mandeb passage, which connects the Red Sea to the Indian Ocean, is also under scrutiny as it is the second most important oil route after the Strait of Hormuz.
Supply risks also increased after Kazakhstan temporarily cut oil production following a suspected Ukrainian drone attack that forced the closure of a key Black Sea export terminal. In terms of market impact, oil remains potentially volatile and tends to be supported by a geopolitical risk premium. If disruptions in Hormuz, the Red Sea, and Kazakhstan's terminals continue, Brent could retest US$100, while global inflationary pressures could increase, making stock and bond markets more sensitive to energy sentiment. (asd)*
Source: Newsmaker.id
