Analyst Says Gulf Risks Keep Brent’s $110 Threshold in View
Supply is recovering, but tanker strikes and pressure on Gulf infrastructure leave oil prices vulnerable to further disruption, according to Kotak Neo’s analyst.
Key takeaways
- Brent reached $105.9 as tanker strikes added to supply concerns.
- Saudi Arabia’s East-West pipeline flow rose to 5.8 million barrels per day.
- A G7 plan calls for releasing up to 100 million barrels over four months.
Brent could still breach $110 as attacks on shipping and Gulf infrastructure sustain oil-market risks, despite recovering supply, Kotak Neo commodity research analyst Kaynat Chainwala said. Whether prices reach that level depends on the intensity and duration of the attacks, she said.
Brent hit $105.9 after a record 10 tanker strikes in and around the Strait of Hormuz in one week. Houthi attacks on Saudi airports and a strike on an Aramco building in Dhahran have also kept pressure on prices, according to Chainwala.
Supply has improved. Saudi Arabia’s East-West pipeline flow rose from 3.5 million barrels per day at September’s end to 5.8 million barrels per day, as the country redirected crude toward Red Sea terminals. A G7 agreement to release up to 100 million barrels of crude and diesel over four months and potential Russian diesel flows could also help rebuild supplies.
But Chainwala said low inventories leave the market with little room to absorb another disruption. The US Strategic Petroleum Reserve is at its lowest level since 1982, while commercial inventories are thin.
She described the near-term risk balance as skewed to the upside, with recovering supply acting as a brake on price gains. A possible request by President Donald Trump for Turkish President Recep Tayyip Erdogan to join a response to Houthi attacks could reduce one source of risk if it materializes, she said.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
