Reportedly, Saudi Arabia cancels some crude oil shipments to Europe, US crude oil breaks through $105
On Tuesday, US crude oil futures rose above $105/barrel, marking the 10th increase in the past 11 trading days, following reports that Saudi Arabia has canceled or postponed shipments originally scheduled to be loaded and sent to some European refiners at the end of September.
Argus Media cited shipping industry sources reporting that at least three European refiners' shipments at the Yanbu export terminal on the Red Sea have been canceled or postponed from the last 10 days of this month to as late as November; all Saudi shipments scheduled to be loaded in the last 10 days of September face the risk of cancellation.
These delays seem to indicate that Saudi Aramco's (ARMCO) east-west crude oil pipeline, which has a daily capacity of 7 million barrels, may be shut down for an extended period. The pipeline has been closed since September 10 due to drone and missile attacks.
Andy Lipow, president of Lipow Oil Associates, said in a report that the cancellation of shipments has strengthened market expectations that European refiners will turn to US supplies, boosting US WTI crude relative to Brent crude.
US Energy Secretary Chris Wright told CNBC on Tuesday that oil should resume flowing through this critical Saudi pipeline within a few days, although most analysts believe the shutdown may last several weeks.
Goldman Sachs said in a report that the attacks on oil infrastructure mark a significant escalation in Middle East conflict and increase the likelihood of Brent crude rising above $120/barrel. One scenario cited by the bank shows that average Persian Gulf oil production in 2027 will still be 4 million barrels per day lower than pre-war levels.
Meanwhile, Reuters reported that on Tuesday, prices for some physical crude oil cargoes in Europe surged above $130/barrel, approaching the record high set in April, as buyers scramble to find alternative sources amid disrupted Middle East supplies.
Vivek Dhar of Australia’s Commonwealth Bank said in a report that some factors that had helped cushion the global oil market from supply disruptions are beginning to weaken: China’s crude imports are rising slightly, while additional non-OPEC+ production outside the Middle East is unlikely to come online before 2027.
Another factor driving oil prices higher on Tuesday was a Reuters report that Libya’s National Oil Corporation has suspended operations at two oil fields and a pumping station due to protests.
On Tuesday, Nymex diesel prices reached a record high, with the front-month October ultra-low sulfur diesel contract (HO1:COM) surging 6% to $5.262/gallon; the front-month Nymex October RBOB gasoline (XB1:COM) rose 4.4% to $3.4652/gallon, marking the highest closing price since August 31.
The front-month October Nymex crude oil (CL1:COM) jumped 4.4% to $105.83/barrel, and the front-month November Brent crude oil (CO1:COM) rose 2.9% to $108.75/barrel, with both benchmarks reaching their highest levels since May 19.
In addition, the front-month October Nymex natural gas (NG1:COM) was slightly up 0.8% to $2.919/MMBtu.
ETFs: (USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG), (XLE)
Argus Media cited shipping industry sources reporting that at least three European refiners' shipments at the Yanbu export terminal on the Red Sea have been canceled or postponed from the last 10 days of this month to as late as November; all Saudi shipments scheduled to be loaded in the last 10 days of September face the risk of cancellation.
These delays seem to indicate that Saudi Aramco's (ARMCO) east-west crude oil pipeline, which has a daily capacity of 7 million barrels, may be shut down for an extended period. The pipeline has been closed since September 10 due to drone and missile attacks.
Andy Lipow, president of Lipow Oil Associates, said in a report that the cancellation of shipments has strengthened market expectations that European refiners will turn to US supplies, boosting US WTI crude relative to Brent crude.
US Energy Secretary Chris Wright told CNBC on Tuesday that oil should resume flowing through this critical Saudi pipeline within a few days, although most analysts believe the shutdown may last several weeks.
Goldman Sachs said in a report that the attacks on oil infrastructure mark a significant escalation in Middle East conflict and increase the likelihood of Brent crude rising above $120/barrel. One scenario cited by the bank shows that average Persian Gulf oil production in 2027 will still be 4 million barrels per day lower than pre-war levels.
Meanwhile, Reuters reported that on Tuesday, prices for some physical crude oil cargoes in Europe surged above $130/barrel, approaching the record high set in April, as buyers scramble to find alternative sources amid disrupted Middle East supplies.
Vivek Dhar of Australia’s Commonwealth Bank said in a report that some factors that had helped cushion the global oil market from supply disruptions are beginning to weaken: China’s crude imports are rising slightly, while additional non-OPEC+ production outside the Middle East is unlikely to come online before 2027.
Another factor driving oil prices higher on Tuesday was a Reuters report that Libya’s National Oil Corporation has suspended operations at two oil fields and a pumping station due to protests.
On Tuesday, Nymex diesel prices reached a record high, with the front-month October ultra-low sulfur diesel contract (HO1:COM) surging 6% to $5.262/gallon; the front-month Nymex October RBOB gasoline (XB1:COM) rose 4.4% to $3.4652/gallon, marking the highest closing price since August 31.
The front-month October Nymex crude oil (CL1:COM) jumped 4.4% to $105.83/barrel, and the front-month November Brent crude oil (CO1:COM) rose 2.9% to $108.75/barrel, with both benchmarks reaching their highest levels since May 19.
In addition, the front-month October Nymex natural gas (NG1:COM) was slightly up 0.8% to $2.919/MMBtu.
ETFs: (USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG), (XLE)