Oil prices rose as tensions escalated in the Middle East, but both international benchmark Brent and US price-pin West Texas Intermediate (WTI) remain below the highs posted earlier this year. The market seems reluctant to push up dramatically despite threats to Mideast oil traffic through the Strait of Hormuz, which would cut global markets off from some 30% of world supply (p1). Attacks on oil infrastructure inside Saudi Arabia posed a further risk but the impact on oil and tanker insurance markets has been surprisingly muted so far. Still, US major Chevron and Japan’s NYK are among several companies refusing to enter the United Arab Emirates’ port of Fujairah where the attacks took place, until the security situation becomes clearer. The US has also withdrawn nonessential staff from several countries in the region while moving military equipment into the area. Brent briefly went above $73 per barrel in intra-day trade Thursday before ending the day at $72.62/bbl, up $2.23/bbl on the week. WTI gained only $1.17/bbl to close at $62.87/bbl. Acting as a drag on oil prices is the US-China trade war and the impact tit-for-tat tariffs are expected to have on global economic growth and oil demand. The International Energy Agency has just trimmed its forecast of demand growth this year from 1.46 million barrels per day to 1.3 million b/d in response.
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