The oil market is reacting sharply to a wave of unsettling news from the Gulf region. As of Monday morning, Brent crude for October and November deliveries surged over 3%, crossing the $108 per barrel mark. Meanwhile, the US benchmark WTI for October also saw an increase of more than 3%, edging around $103. This uptick follows last week’s announcement that the East-West pipeline, which carries crude oil across Saudi Arabia to Red Sea ports, is temporarily shut down due to drone attacks, severely impacting oil supplies at a critical time. This pipeline serves as a vital alternative route for oil exports, especially when the Strait of Hormuz, the traditional passageway, is fraught with danger.
Just yesterday, the dangers of the Strait became painfully clear when a merchant vessel was reportedly struck, resulting in one fatality and three injuries, as confirmed by Iranian officials. The route through the waterway has transformed drastically since the onset of conflict—it now requires vessels to obtain permission from Iranian authorities for transit. Tehran is even contemplating service fees for vessels passing through. Ships that ignore these regulations frequently find themselves targeted, while US military forces have been known to conduct airstrikes along the Iranian coastline in an effort to disrupt Tehran’s oil trade.
The repercussions of these developments are hitting American consumers hard. For the first time in history, the national average price of diesel in the US has exceeded $6 a gallon, skyrocketing from about $5.85 just a week earlier. This represents an astonishing 60% increase from the $3.71 drivers were paying just a year ago. Petrol prices are also causing concern, averaging around $4.22, particularly after setting record highs over the recent Labor Day weekend.
President Donald Trump, while attending the Irish Open at his Doonbeg golf resort, has shifted the blame elsewhere. He remarked to reporters that Ukrainian President Volodymyr Zelenskyy “has to stop knocking out diesel fuel in Russia,” suggesting that these actions are contributing to the diesel shortage. According to Lipow Oil Associates, the disruption around the Strait of Hormuz is expected to affect approximately 1.2 million barrels from the market. The broader context reveals a startling decline in crude oil flows through the strait, plummeting from around 20 million barrels per day before the conflict to a mere 7 million now. Moreover, the ongoing wars have shuttered refineries that previously accounted for about 5 million barrels a day of capacity.
With all this turmoil, one can’t help but wonder what the next steps will be in this evolving situation. Will prices continue their upward trend, or can we expect a resolution soon? Only time will tell as we brace for further developments…
Kaynak: Orijinal Haber