Brent: Supply risks and Saudi cuts support prices – ING
ING analysts Warren Patterson and Ewa Manthey note that Brent and WTI have rallied sharply as Middle East tensions escalate and Saudi Arabia reports a steep drop in output.
ING analysts Warren Patterson and Ewa Manthey have highlighted the increased supply risks and Saudi cuts supporting oil prices. Middle East tensions have escalated, causing Brent and WTI crude oil prices to surge. Saudi Arabia reported a significant drop in output, which has raised concerns about the security of energy infrastructure and Red Sea exports.
The Houthis in Yemen have targeted Saudi Arabia, increasing the threat to shipping around the Bab al-Mandeb Strait. China's increased crude buying and tight US inventories have further contributed to the market focus on supply vulnerabilities. Oil prices reached over $110/bbl, nearing their highest level in months. The fragile situation is evident as flows through the Strait of Hormuz remain well below pre-war levels.
Saudi Arabia's August production numbers, reported to OPEC, also indicate a low production level, signaling potential supply concerns. Meanwhile, Chinese refineries have increased their run rates, further impacting the market. US crude oil inventories fell slightly last week, with gasoline and distillate stocks increasing, providing some relief to refined product markets.
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