Oil prices climb as Iran deploys new tactics to target ships transiting Hormuz

Oil prices surged on October 14 as two vessels were attacked in the Strait of Hormuz and Iranian officials announced the deployment of new tactics to target ships, aiming to maintain high oil prices and influence the US midterm elections. Brent crude futures increased by 63 cents, or 0.6%, to $106.32 a barrel, while US West Texas Intermediate crude futures gained 66 cents, or 0.7%, to $94.80 a barrel.

The attacks on the vessels, a container ship and a tanker, were confirmed by the United Kingdom Maritime Trade Operations on Tuesday. Iranian officials declined to share details of their new strategy but confirmed they had begun using different offensive tactics against vessels they deemed in violation of restrictions about 10 days ago, resulting in an increase in attacks on such ships.

The Iran-allied Houthis also attacked a Saudi Aramco administrative building in Dhahran, causing a small fire, and have been firing ballistic missiles and drones at Saudi Arabia in retaliation for the kingdom's support of Yemeni government forces. The tension between the Houthis and Saudi Arabia is contributing to supply concerns and driving prices higher, according to Hiroyuki Kikukawa, a chief strategist at Nissan Securities Investment.

However, expectations that increased Russian diesel exports will alleviate market tightness may limit the extent of price fluctuations, with WTI projected to trade between $90 and $100 a barrel. Saudi Arabia recently raised oil production despite disruptions to shipments caused by the US-Iran war, leading to a significant increase in OPEC+ production.

Russia stated it does not see a direct link between peace talks with Ukraine and its diesel export deal to the US.