(Bloomberg) — Oil nudged higher as supply risks in the Middle East remained elevated following a second attack in three days on Fujairah, a vital port in the United Arab Emirates that’s just outside the Strait of Hormuz.
Brent rose near $104 a barrel, while West Texas Intermediate was near $101. Futures have surged more than 40% in the past two weeks. Oil loading at Fujairah was suspended and damage was being assessed, according to people familiar with the latest incident. That followed a drone strike at the site on Saturday, which interrupted shipments from the country’s only viable oil export route.
The US said late on Friday that it had struck military sites on Kharg Island, which handles the bulk of Iran’s oil shipments, although the Fars News Agency reported that exports from the island were continuing.
Meanwhile, US President Donald Trump told reporters on Air Force One that he is “demanding” that other countries contribute to the defense of the Strait of Hormuz, the vital maritime thoroughfare linking the Persian Gulf to international markets.
The bombing of Kharg Island added to the scope of the conflict, which the International Energy Agency last week said has already caused the largest supply disruption in the history of the global oil market. Traffic through the Strait of Hormuz has remained at a near-standstill since fighting began.
“The Hormuz closure is turning a shipping disruption into a true global supply loss as storage in the region fills and upstream shut-ins rise,” Morgan Stanley analysts including Martijn Rats and Charlotte Firkins wrote. The bank raised its forecast for the second quarter to $110 a barrel.
In an interview with the Financial Times, Trump said he could delay his planned summit with Chinese President Xi Jinping if Beijing didn’t help unblock the waterway. He also warned in that interview that NATO would face a “very bad” future if member states failed to help in Hormuz.
A trickle of vessels is beginning to find a way through Hormuz. Over the weekend a Greek shipowner sent a vessel with its signal switched off, while a Pakistani oil tanker also appears to have made the perilous journey. India is in talks with Iran to ensure safe passage for six tankers carrying liquefied petroleum gas.
When asked if there were any negotiations between the US and Iran, Trump said Washington is talking to Tehran but that he’s not sure if Iranians were “ready.” Oil prices will “come tumbling down” as soon as the war is over, he added. Iranian Foreign Minister Abbas Araghchi said over the weekend that the Islamic Republic hadn’t asked for talks or a ceasefire.
The drawn-out conflict is taking a toll on energy consumers, prompting China’s biggest oil refiner to trim run rates although officials said Beijing’s robust energy supply can cushion external shocks despite oil price volatility.
In a sign of how the war is squeezing global crude supply, the IEA said Sunday that oil from an unprecedented stockpile release will be made available immediately in Asia. The agency’s statement came after it received implementation plans for the record 400-million-barrel reserve release announced last week.
Japan began its release on Monday, while the US is set to roll out the first tranche of its 172‑million‑barrel commitment this week. However, Washington has framed the move as an exchange — essentially a loan that companies must eventually return with interest.
“A lot of the geopolitical premium was already priced last week, so traders seem to be waiting for clearer signs of actual supply loss before pushing prices materially higher,” said Haris Khurshid, chief investment officer at Karobaar Capital LP in Chicago. After the attack on Kharg, it “looks like the market is pricing disruption rather than a full supply shock,” he added.
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