Oil benchmarks gave back part of a sharp rally on Thursday after President Donald Trump said Washington would not strike Iran before November's U.S. midterm elections. Brent and WTI crude still finished higher as Gulf coast storm risk and attacks on tankers in the Strait of Hormuz kept supply fears alive.
Brent crude futures expiring in December climbed 3.9% to $104.10 a barrel, having been up more than 5% earlier in the session. WTI crude futures expiring in November added 3.6% to $91.42 a barrel over the same stretch.
Trump rules out striking Iran before midterms
Crude pared its gains after Trump said on his Truth Social platform that the U.S. would not attack Iran before the midterm elections on November 3rd. According to Trump: "We are having productive discussions with the Islamic Republic of Iran," he said, while maintaining that the blockade on Iran would stay in force.
The remarks followed media reports, including from the Atlantic, that Trump was weighing a resumption of strikes on Iran before the midterms, a prospect that had clouded market sentiment earlier in the session.
Hormuz attacks and a Gulf coast storm keep supply at risk
Vessel transits through the Strait of Hormuz slid to an over two-month low, Reuters reported, citing shipping data from analytics firm Kpler, as Iranian attacks on tankers in the waterway increased. On Wednesday, the United Kingdom Maritime Trade Operations body said a tanker was struck by multiple projectiles just north of Qatar, with casualties reported. Houthi forces also attacked a refinery in Riyadh this week amid continued hostilities with Saudi Arabia.
Separately, Tropical Storm Isaias is expected to strengthen into a hurricane and make landfall on the northern Gulf coast by the weekend, the U.S. National Weather Service said, with early-Thursday reports indicating it had already become a hurricane. BP, Chevron, and Shell have the most exposure to potential production disruptions and were seen evacuating non-essential personnel from offshore facilities. A model cited by Reuters forecast up to 11.2 million barrels of oil production could be lost across the Gulf through the storm's duration.
Inventories fall as IEA weighs reserve release
U.S. crude oil inventories fell by 3.2 million barrels in the week to October 2, data released Wednesday showed, missing expectations for an increase. Oil had also pared gains on Wednesday after the IEA said completing its previously announced release of 400 million barrels of oil stocks as soon as possible would bring about 100 million barrels to the market, though it remained unclear whether the move would involve an additional release.
Analysts at Deutsche Bank noted there were few signs that energy-driven pressure on inflation was easing, a concern that has stoked worries over further central bank policy tightening.
Source: Commodities & Futures News
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