Crude oil up as market fears supply disruptions due to tensions in West Asia 

Crude oil futures traded higher on Thursday morning due to fears of a possible supply disruptions following the assassination of a Hamas leader in Iran.

At 9.54 am on Thursday, October Brent oil futures were at $81.45, up by 0.75 per cent, and September crude oil futures on WTI (West Texas Intermediate) were at $78.58, up by 0.86 per cent.

August crude oil futures were trading at ₹6583 on the Multi Commodity Exchange (MCX) during the initial hour of trading on Thursday against the previous close of ₹6524, up by 0.90 per cent, and September futures were trading at ₹6506 against the previous close of ₹6452, up by 0.84 per cent.

The Hamas leader Ismail Haniyeh was assassinated in Tehran on Wednesday. This followed the killing of a Hezbollah commander in Beirut a day earlier. Though Israel did not claim responsibility for the killing of Hamas leader, Iran threatened to retaliate stating that Israel would pay a heavy price for this. This has escalated the fears of a possible crude oil supply disruption in West Asia region.

In their Commodities Feed, ING Think’s Warren Patterson, Head of Commodities Strategy, and Ewa Manthey, Commodities Strategist, said the region and oil market will now be on tenterhooks to see how and if Iran retaliates.

“Iran’s new President had previously said that he would strive to normalise economic and international relations through the lifting of US sanctions. If so, the Iranian regime might try to take a more measured response that does not jeopardise this aim. Either way, the market will likely need to price in a larger geopolitical risk premium until these tensions subside,” they said.

Meanwhile, official data from the US EIA (Energy Information Administration) showed a decline in crude oil inventories for the week ending July 26. US commercial crude oil inventories decreased by 3.4 million barrels for the week ending July 26 from the previous week. At 433 million barrels, US crude oil inventories were about 4 per cent below the five-year average for this time of year.

Total motor gasoline inventories decreased by 3.7 million barrels from last week and were about 3 per cent below the five-year average for this time of year.

Total products supplied in the US over the last four-week period averaged 20.5 million barrels a day, up by 1.4 per cent from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.2 million barrels a day, up by 4.2 per cent from the same period last year.

US crude oil imports averaged 7 million barrels a day last week, an increase of 82,000 barrels a day from the previous week. Over the past four weeks, crude oil imports averaged about 6.9 million barrels a day, 5.9 per cent more than the same four-week period last year.

August lead futures were trading at ₹188.30 on MCX during the initial hour of trading on Thursday against the previous close of ₹188.70, down by 0.21 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), August dhaniya contracts were trading at ₹7264 in the initial hour of trading on Thursday against the previous close of ₹7254, up by 0.14 per cent.

August guarseed futures were trading at ₹5636 on NCDEX in the initial hour of trading on Thursday against the previous close of ₹5661, down by 0.44 per cent.

--EOM--