Oil Prices Jump Even as Houthis Offer Peace
U.S. WTI futures and Brent crude prices both jumped more than 1 percent during Asian trade on Monday as tensions in the Middle East kept traders concerned about global supply levels and the potential for future disruptions. Over the weekend, the Yemenite Houthi rebels offered to stop attacks in Saudi Arabia if the Saudis step away from Yemen, reopen the Sana’a airport, and lift the current blockade on the port of Hodeidah. The Houthi’s offer came right after a Saudi-led coalition intercepted a Houthi boat containing a bomb near Hodeidah last week. According to Al Jazeera, the United Nations envoy for Yemen has said that the Houthi’s offer could end years of deadly conflict in the region.
Nevertheless, the United States and Saudi Arabia question whether the offer is relevant as they continue to contend that it wasn’t Houthi rebels, but Iranian aggressors, that carried out the attacks on two key Saudi oil fields last week.
U.S. WTI futures were up 1.03 percent as of 1:30 p.m. HK/SIN, to $58.69 per barrel, while Brent futures climbed 1.06 percent to $64.96 per barrel.
Other Oil Pressures Continue
According to Bloomberg, Saudi Aramco is committed to prevent a decline in export levels after the disruption of its primary oil fields, as such a disruption which would send prices even higher. However, many analysts question whether the Saudi’s recovery plan is realistic given the extent of the damage and the short timetable they’ve provided.
In the meanwhile, Saudi Aramco has an estimated one month of inventories, Bloomberg reported. If they aren’t able to get the Abqaiq facility fixed quickly, inventories will begin to get depleted and global supply will be interrupted, which will have immediate negative impacts on the global economy.
Still, the true numbers relating to inventories aren’t entirely known, as October barrels had already set sail before the drone attacks, which means that while global inventories are likely to remain mostly stable at the start of October, there may be a hole in inventory levels closer to the end of the month, leading into November.
For now, Saudi Aramco continues to maintain that everything is going as well as possible and that they will continue to remain a leading global supplier. The truth in this statement remains to be seen.