Oil prices this week reached $99 per barrel, representing a 15% decrease compared to last week. This price drop is attributed to expectations for diplomatic progress between the United States and Iran and a reduced likelihood of continued tensions in the Middle East.
Continued Attacks in the Strait of Hormuz
Despite hopes for an agreement, Iranian drone and missile attacks in the Strait of Hormuz continue. These attacks have raised concerns about the security of oil transit in this strategic region.
Saudi Price Reductions and US Pressures
Saudi Arabia's national oil company, Aramco, has uniformly reduced its official selling prices for oil to Asia by $2 per barrel for December 2026, setting the price of Arab Light oil with a $7 discount compared to Dubai/Oman prices. This is the lowest pricing level since June 2020.
The US Treasury Department has also imposed new sanctions on individuals and companies in India and Turkey accused of providing false flags and certificates for vessels carrying Iranian oil. These actions have increased pressure on Iran as the environment for reducing tensions seems to be diminishing.
Abu Dhabi National Oil Company (ADNOC) is considering constructing a new pipeline to transport oil from other Middle Eastern producers to Fujairah. This new pipeline will help the UAE expand its regional influence and launch its second pipeline in the first quarter of 2027.
Meanwhile, the Indian government has announced it will allocate $1.5 billion to create 92 gigawatts of energy storage capacity to enhance the integration of its existing 230 gigawatts of solar and wind capacity.
Colombia is also looking to hold a new round of hydrocarbon licensing in 2027. This move follows the lifting of a ban on new exploration imposed by former President Gustavo Petro to increase energy self-sufficiency.
Finally, Russian officials have paid 415 billion rubles (equivalent to $5.1 billion) to refineries in October 2023, marking the highest payments since April 2022. These subsidies are aimed at downstream producers to sell their products in the domestic market instead of exporting.
Read more: Fire on Five Tankers and a Tugboat in the Strait of Hormuz
