Brent crude oil reached $110 on Friday night, a figure close to oil prices during the peak of the U.S. and Israel's war against Iran. This sudden increase in oil prices has led to various speculations about the occurrence of another war against Iran, attracting the attention of many media outlets and analysts.
Oil Price Analysis and Influencing Factors
Brent crude oil approached $110 per barrel with a growth of over 3.3%, while West Texas Intermediate (WTI) crude also saw an increase of over 2% to nearly $99 per barrel. This price rise occurred amidst reports indicating a relative balance between oil supply and demand in the global market. Recently, Kepler reported that the average oil transit through the Strait of Hormuz in the seven days ending October 13 was 11.62 million barrels per day. This figure is close to the oil transit numbers through the Strait of Hormuz before the Gulf War, accounting for about 68 to 70 percent of it.
The Three Wars and Their Impact on the Oil Market
The global oil market is now facing three wars: the Gulf War, the Russia-Ukraine War, and the Houthis' conflict with Saudi Arabia. Before the U.S. and Israel's war against Iran, oil prices were in the $70 range. With the onset of the war and the blockade of the Strait of Hormuz, oil prices surged to $110. Currently, this price increase has even led to speculations about the resumption of wars. Oil market analysts cite multiple reasons for the renewed rise in oil prices, one of the most important being the increased level of tension in the Gulf. Although oil transit through the Strait of Hormuz has significantly increased, the rise in attacks on oil tankers and the risk of attacks on ships in this strait remains serious.
Analysts from ING Bank wrote in a note that uncertainties in the Middle East and concerns about the continuity of oil flow through the Strait of Hormuz have led the market to factor in significant risk premiums in prices. They added that to create more confidence in the market, reaching an agreement to end the war between the U.S. and Iran is essential.
The increase in attacks on Saudi Arabia's energy infrastructure has received particular attention. The Houthis have threatened to continue attacks on Saudi oil facilities, and on Tuesday, the central building of Aramco in Dhahran was targeted. These attacks continue at a time when Saudi Arabia is considered one of the three largest oil producers in the world and plays a decisive role in the oil market.
On the other hand, the war in Russia and Ukraine has also led to widespread attacks on energy infrastructure and refineries in Russia. Recently, Ukraine attacked an oil refinery in Russia, which caused the shutdown of one of the main crude distillation units at this refinery.
Finally, the significant reduction in strategic oil reserves has also influenced the increase in demand for oil. The International Energy Agency has announced that another 100 million barrels of diesel, gasoline, and oil will be released into the market.
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