"Light Crude Oil Futures (WTI) are now at 100.92, down 1.23%. Meanwhile, ICE Brent crude Futures also declined, trading at 106.49, down 1.19%. The upward factors for oil prices remain in place amid the absence of any sign of an imminent diplomatic settlement to the Middle East war, keeping the door open to escalation risks that could deepen the damage to the region's oil production and export infrastructure."
"Conversely, oil prices may face downward pressure, helping to balance prices or slow their rise, reflecting a partial adaptation of energy supply chains in the Middle East to the closure of the Strait of Hormuz, alongside escalating economic risks amid pessimism about the possibility of lowering interest rates. Iraq and Pakistan have secured bilateral agreements with Tehran to ship oil and liquefied natural gas through the Gulf, demonstrating Iran's growing dominance over the region."
"While the U.S. continues its blockade of Iranian ports, Claudio Steuer of the Oxford Institute for Energy Studies notes that Iran has shifted from simply blocking the Strait of Hormuz to "controlling access to it," effectively turning the waterway into a "controlled corridor" rather than a neutral route. Iraq recently secured safe passage for two tankers carrying 4 million barrels of crude, while Pakistan is receiving Qatari LNG shipments under similar arrangements."
"Meanwhile, Gulf energy producers are using emergency backup routes to maintain global supply, according to The Wall Street Journal. Saudi Aramco is relying heavily on its East-West pipeline to transport oil to the Red Sea port of Yanbu, while the United Arab Emirates has redirected more crude through Fujairah. These alternatives allow a significant share of oil and natural gas to reach global markets despite the sharp decline in regional exports since the conflict began."
Oil prices retreat as WTI and Brent fall after prior sharp increases. Prices remain supported by the lack of any imminent diplomatic settlement to the Middle East conflict, which keeps escalation risks open and could worsen damage to regional oil production and export infrastructure. Downward pressure also emerges from partial adaptation of energy supply chains to the closure of the Strait of Hormuz, alongside rising economic risks tied to pessimism about interest-rate cuts. Iraq and Pakistan secure bilateral agreements with Tehran to ship oil and liquefied natural gas through the Gulf, reflecting increased Iranian influence. Iran shifts from blocking access to controlling the corridor, while Iraq and Pakistan use safe-passage and LNG arrangements. Gulf producers maintain supply using backup routes, including Saudi Aramco’s East-West pipeline to Yanbu and UAE rerouting through Fujairah, helping sustain global deliveries despite reduced regional exports.
Read at London Business News | Londonlovesbusiness.com
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