Oil set to end week above $100 for first time since mid-May as US diesel hits record high
Iran said it had 10 ships near the Strait of Hormuz on Wednesday, after the US hit five Iranian oil tankers. Iran's Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.
Oil prices slipped today (11 September) but remained on track to end the week above $100 a barrel for the first time since mid-May, and US diesel prices hit a record high as attacks along key Middle East shipping routes stoked prolonged supply disruption fears.
Brent crude futures fell $1.65, or 1.53%, to $105.98 a barrel by 0758 GMT. US West Texas Intermediate crude fell $1.36, or 1.33%, to $101.12 a barrel.
The benchmarks pared all early gains to trade lower after the Financial Times reported that foreign ministers in the Middle East are trying to work out a temporary deal with Iran to manage shipping through the Strait of Hormuz.
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Both benchmarks rose more than 6% yesterday and were still trading more than 10% higher on a weekly basis.
"Some headlines of possible new talks in the Middle East are weighing moderately on oil prices today," said UBS energy analyst Giovanni Staunovo, adding, "I keep seeing near-term risks to the upside for oil prices, but we should expect ongoing high price volatility too."
Iran said it had 10 ships near the Strait of Hormuz on Wednesday, after the US hit five Iranian oil tankers. Iran's Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.
The Strait of Hormuz handled about one-fifth of global daily oil and liquefied natural gas supplies before the Iran war began in late February.
Iran-aligned Houthis seized control of Yemen's port on Thursday, posing a further threat to Red Sea traffic, while Gulf traffic remains restricted through the tanker attacks in the region in recent days.
Attacks from Yemen on Saudi energy facilities marked an escalation beyond the Strait of Hormuz and raised fears of prolonged disruptions in the broader region, analysts say.
Global oil supply and demand will fall further than previously thought this year, said, as a lack of progress in ending the Iran war delays the return of normal Middle East flows into 2027.
SUPPLY DISRUPTIONS LIFT FUEL PRICES
Oil supply disruptions due to the Iran war, along with Ukrainian attacks on Russia's refineries, pushed the US national average past $6 a gallon for the first time ever on Thursday, according to price tracker GasBuddy.
"Refined products, particularly diesel, are feeling a one-two punch right now," said Tim Waterer, chief market analyst at KCM Trade.
"As long as both the Gulf shipping constraints and Russian refining outages remain in play, diesel and other refined products are likely to show a higher upside tendency than the broader crude market," he added.
The US president has not shown any signs of easing attacks on Iran. He said the US may hit Iran's Pickaxe Mountain near its heavily damaged Natanz uranium enrichment facility, but he said he thought the war would end immediately after the November midterm elections.
Elsewhere, China's state planner said on Friday it will raise retail price caps on petrol and diesel from 12 September by 260 yuan ($38.76) and 250 yuan per metric ton, respectively.
