Standard Chartered: Oil Markets Must Now Price Two Middle East Chokepoints
and Iran Halt Attacks Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.
Oil prices gave up earlier gains on Friday after reports thatPakistan is trying to brokera return to U.S.-Iran nuclear negotiations.
China is strongly backing the effort as the conflict and the closure of the Strait of Hormuz continue to threaten its energy security and weigh on its economy.
Brent crudefor September delivery fell 4.4% to trade at $96.36 per barrel at 1.35 pm ET while WTI crude for September delivery was down 3.6% to change hands at $88.86/bbl.However, Standard Chartered says the latest pullback may prove temporary as Middle Eastoil market riskhas expanded from one strategic chokepoint to two.
On Monday,Yemen's Houthi militant groupimposed a targeted maritime blockade against Saudi Arabia, threatening to enforce it by blocking Saudi-linked vessels from transiting the vital Bab el-Mandeb Strait.
The group claimed the blockade was a direct retaliation for a decade-long Saudi containment of Yemen as well as a recent Saudi-backed airstrike targeting Sanaa International Airport.
The threat immediately rattled oil markets, prompting multiple Saudi-linked very large crude carriers (VLCCs) to abandon planned transits through the Bab el-Mandeb Strait and instead reroute around Africa’s Cape of Good Hope, adding up to two weeks to each voyage.
Two days later, the Houthis followed through.
The group launched ballistic missiles and drones at two Saudi oil tankers on Thursday, damaging both vessels and igniting fires onboard.
Brent crude surged nearly $20 per barrel, briefly climbing above $100.
Related: Oil Market's Glut Narrative Just Blew Up The attacks came after Saudi Arabia had already shifted roughly 70%-75% of its crude exports through the East-West pipeline to theRed Seaport of Yanbu as continued closures and disruptions limited shipments through the Strait of Hormuz.
Standard Chartered estimates that loadings at Yanbu had climbed to approximately 4.5 million barrels per day as Riyadh redirected exports away from the Arabian Gulf.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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