The Commodities Feed: Oil slides on easing Middle East tensions

Energy – Oil extends losses Oil prices extended their decline on Tuesday, with Brent falling below $92/bbl and WTI trading around $86/bbl. The market has continued to unwind some of the geopolitical risk premium built into prices in recent weeks as expectations grow that the conflict between the US and Iran could move towards de-escalation.

Signs that regional oil flows are recovering have added to the downward pressure. Crude exports from the Persian Gulf are estimated to have returned to around 80-85% of pre-war levels, including pipeline volumes, while refined product shipments have recovered to roughly 35-40%. Reports that Iran may be softening its position on control of the Strait of Hormuz have also reduced concerns over a prolonged disruption to one of the world’s most important oil transit routes.

The improvement in regional flows is starting to show up in Chinese trade data. China’s crude oil imports increased 13% month-on-month in October to around 42mt, or 9.9m b/d, helped by a recovery in shipments from the Persian Gulf and stronger Iraqi volumes. However, imports were still around 13% below year-ago levels, highlighting the lingering impact of the conflict on supply.

Away from the Middle East, disruption to energy infrastructure remains a source of uncertainty. Ukrainian attacks on Russian refining capacity have continued alongside Russian strikes on Ukraine’s energy system, while a fire affecting Saudi Arabia’s East-West pipeline was contained without a significant interruption to flows.

This story was originally published by Hellenic Shipping News. Read the full story at Hellenic Shipping News →