Oil Prices Poised for 16% Weekly Increase Amid Middle East Turmoil

Weekly Surge in Crude Oil Prices

Crude oil prices are set to finish the week with gains exceeding 16%, despite a brief decline on Thursday after the U.S. indicated it may intervene in the futures market to stabilize prices.

Market Update: Brent and WTI

At the time of reporting, Brent crude was valued at $84.66 per barrel, while West Texas Intermediate traded at $79.94 per barrel. On Thursday, the U.S. Treasury announced it would grant sanction waivers to commodity traders, allowing them to sell Russian oil currently stored on tankers. This move comes as Middle Eastern oil supplies dwindle due to significant disruptions in tanker movement through the Strait of Hormuz. According to media sources, the oil will be shipped to India, with Bloomberg estimating the volume at approximately 9.5 million barrels. The waiver is valid for 30 days.

Impact of Strait of Hormuz Disruptions

Phillip Nova senior analyst Priyanka Sachdeva explained to Reuters that ongoing interruptions in Hormuz are causing two major challenges: the inability to store up to 20 million barrels per day and restricted global supply, both of which could push energy prices higher.

Production Cuts in the Middle East

Recent reports suggest that some oil producers in the Middle East may soon be forced to reduce output due to limited storage options. Iraq has already begun cutting production by about 1.5 million barrels daily. Kuwait could follow unless shipping through Hormuz resumes within two weeks.

Related: Trump’s Secret Weapon in the Rare Earth War

Sanction Waivers: Temporary Relief

Analysts from ING commented that while the U.S. sanction waivers may temporarily ease market pressures, they are unlikely to have a lasting effect. A sustained drop in oil prices would require the restoration of normal oil flows through the Strait of Hormuz, which currently seems improbable.

By Irina Slav for Oilpire.com

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