Oil prices were set for a second weekly gain as rising Middle East supply risks balanced against a fresh release of emergency reserves. Brent crude traded near $106 a barrel, up almost 1% for the week, while West Texas Intermediate hovered around $97. The narrowing gap between Brent and WTI reflects reduced shipping costs for US crude, with the cost to send a typical cargo from the Gulf Coast to Rotterdam falling about 12% over the past week, per Baltic Exchange data.
Increased uncertainty around physical flows from the Persian Gulf followed confirmation by US Central Command that a container ship sunk in the Strait of Hormuz was struck by an Iranian projectile. Despite the attack, over 40 vessels transited the strait in the last 24 hours, indicating continued flow. International Energy Agency member nations pledged to complete the release of 100 million barrels of oil still outstanding from a March intervention, following US lobbying.
US crude inventories fell by 8.6 million barrels last week—the largest drop since February—driven by Hurricane Isaias-related shut-ins, strong refinery runs, and exports. Distillates stockpiles also declined by 2.5 million barrels to a seasonal low. Eurasia Group analysts raised the odds of conflict escalation to 65% from 35%, stating the standoff is no longer sustainable for the US.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing