📋 Tender Overview
The increase in oil prices is mainly supported by concerns about supply, in the context of the US threatening to impose stronger sanctions on Iran and countries that support Tehran. Download Strait of Hormuz - Source: APClosing yesterdays session, the prices of two crude oil products simultaneously increased - extending the series of improvements to the 5th consecutive session. Specifically, Brent oil price was at 93.78 USD/barrel, up 2.36%, while WTI oil price increased 2.33% to 87.83 USD/barrel. The increase in oil prices was mainly supported by concerns about supply, in the context of the US threatening to impose stronger sanctions on Iran and countries that support Tehran. This move increases concerns about a prolonged conflict, leading to the risk of continued oil supply disruption. Oil supply is under a lot of pressure Yesterday (August 20), US President Donald Trump threatened to impose economic warfare measures and isolate Iran on an unprecedented scale, and warned that countries and businesses that continue to support Tehran will suffer serious economic consequences. This raises concerns that the US may tighten sanctions on its activities. Irans oil exports, especially when China is currently the largest customer, accounting for more than 80% of Irans oil exports by sea. If secondary sanctions are implemented, the amount of Iranian oil released to the international market is at risk of continuing to decrease, thereby increasing the risk of supply shortages and supporting oil prices. In addition, the demand for hiring oil tankers also increases sharply as Gulf exporters must find ways to maintain oil flows to the market in the context that operations through the Strait of Hormuz are still interrupted. The shift to alternative transportation options, including transshipments and extended voyages, reduces the fleets turnaround capacity and pushes charter costs to record highs. Rising shipping costs and extended delivery times also put oil supply in the market under more pressure in the short term, thereby supporting prices. The market will continue to closely monitor the measures that the US is expected to announce on Iran next Monday, along with ship traffic through the Strait of Hormuz to assess Actual level of supply disruption. Supply was also under further pressure when Norways crude oil production in July decreased by nearly 200,000 barrels/day over the same period, to about 1.78 million barrels/day. This development partly increases concerns about supply outside the Middle East in the context that the market is still affected by the crisis in the Strait of Hormuz. In the US, a number of fundamental factors partly limit the increase in oil prices. Refining activities increased by 97.2%, with the amount of crude oil entering refineries reaching 17.4 million barrels/day. Meanwhile, crude oil inventories increased by 4.4 million barrels to 428.8 million barrels. However, crude oil inventories at Cushing, an important storage and delivery hub for WTI oil, decreased to 21.252 million barrels. This shows that the physical oil supply at this delivery center is tightening, thereby continuing to support WTI prices. In addition, oil refining activities in Venezuela are showing signs of improvement, with factories currently processing about 350,000 barrels/day, enough to meet domestic gasoline demand and help reduce dependence on external imports. See more Middle East tensions escalate: Oil prices reverse to increase See more Expectations to open shipping routes Download strategies to pull oil prices down See more Geopolitical tensions push oil prices up 15% See more US-Iran conflict raises concerns about oil supply disruption See more After the US-Iran agreement, oil flows through Hormuz began to recover See more Expectations of US-Iran peace pulled oil prices to their lowest in more than 3 months
