Crude oil prices faced a significant increase today, with Brent crude reaching $103.13 per barrel and West Texas Intermediate (WTI) at $89.53. This price rise occurred after reports indicated Donald Trump, the President of the United States, was unwilling to ease sanctions against Iran. These sanctions have severely impacted the exports of one of the largest OPEC producers.
Price Developments and Their Impacts
This week, prices initially dipped slightly, but after it became clear that oil flow from the Persian Gulf had returned to levels close to pre-war daily averages, they rose again. However, there are many uncertainties regarding the sustainability of this improvement. According to Sugandha Sachdeva, analyst and founder of SS WealthStreet, "Continued uncertainty regarding the easing of sanctions and negotiations has kept a geopolitical risk premium in prices." She also added that "improved supply could limit further increases, but renewed disruptions or escalating tensions could bring about a new wave of price hikes."
Oil Exports from the Persian Gulf and Their Impact on the Market
Kpler data shows that oil exports from the Persian Gulf have significantly increased this month, with flows from the Strait of Hormuz reaching 13.2 million barrels per day, equivalent to 77% of pre-war levels. Another report from Reuters, citing Kpler data, specifically stated that oil flow from the Strait of Hormuz was 7.4 million barrels per day, and the total oil export rate from the Middle East was 12.8 million barrels per day.
Despite increased ship traffic from the Strait of Hormuz, flows remain below pre-conflict levels, leading to a supply shortage in the market. Giovanni Staunovo, a commodities analyst at UBS, stated that "this shortage may be a factor keeping oil prices high, along with existing risks for tankers in the Strait of Hormuz, despite improved exports."
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