Key Takeaways:
Drone strikes on the Caspian Pipeline Consortium terminal halted Black Sea loadings again, cutting Russian crude exports by up to 2 million barrels a day.
Oil climbed in early Asian trade as drone attacks halted Black Sea loadings at the Caspian Pipeline Consortium terminal again, with TD Securities projecting Russian exports down 1 million to 2 million barrels a day.
"Russian crude exports will continue to be reduced by 1 million to 2 million barrels per day compared with June averages, and this could become a more prolonged outage as drone attacks persist," two members of TD Securities' Macro Research said in a research report.
Front-month WTI crude futures rose 0.6 percent to $84.07 a barrel in early Asian trade. The move extends a volatile stretch for crude, which settled lower Thursday after Brent touched a session high of $93.31 and WTI reached $85.94 before retreating. The Strait of Hormuz, which normally handles about a fifth of global oil and liquefied natural gas flows, has remained a focal point since the US and Israel launched the war on Iran on Feb. 28.
The repeated disruptions at multiple maritime chokepoints — the Black Sea, the Red Sea and the Strait of Hormuz — are draining inventories and keeping a risk premium embedded in prices. "Given the disruption to flows through several maritime chokepoints, as well as the rapid depletion of oil inventories, prices could feasibly be even higher than where they sit currently," said Hamad Hussain, senior climate and commodities economist at Capital Economics.
The CPC terminal, which ships crude from Kazakhstan's Tengiz field to the Black Sea, has become a repeated target. A vessel was hit during loading Thursday, and tankers planned for loading are now heading away from the terminal, two sources said and shipping data showed. The halt came days after operations had restarted, showing the fragility of the route.
The attacks are part of a broader Ukrainian campaign against Russian oil export infrastructure. A Ukrainian drone attack caused a fire at Lukoil's Perm refinery that damaged and forced the shutdown of one of its crude distillation units, two industry sources told Reuters.
While oil fell Thursday as traders weighed talks between Oman and Iran over the Strait of Hormuz, analysts cautioned that the risk premium would persist until safe passage is assured. "Until safe passage through the Strait of Hormuz is no longer a gamble, the risk premium in oil is not going anywhere — hope for diplomacy is welcome, but the market is pricing in the reality of ongoing strikes," said Tim Waterer, chief market analyst at KCM Trade.
Iran and Oman continued talks on management of the strait, according to the Iranian Labour News Agency, though a senior Iranian official said Wednesday that Tehran had ruled out Oman's proposal for regional joint management of the waterway.
The US military said it had hit dozens of Islamic Revolutionary Guard Corps targets in Iran in an operation launched after Tehran fired ballistic missiles at US forces in the Middle East. No US aircraft were destroyed in the recent attempted Iranian attacks, the US military said Thursday, denying an Iranian claim that three F-35 jets and three other aircraft were destroyed.
The compounding supply disruptions carry direct consequences for energy costs and inflation. With Russian exports cut by as much as 2 million barrels a day and loadings halted at multiple chokepoints, refiners face higher input costs that could feed through to fuel prices. If drone attacks persist and the Strait of Hormuz remains contested, crude could push toward the $93 level touched Thursday, pressuring energy-consuming economies while benefiting producers able to ship through unaffected routes.
This article is for informational purposes only and does not constitute investment advice.
