(Oct 19) : Oil steadied after jumping on Friday, as flareups in fighting in the Middle East and Ukraine dimmed the prospect of a return to normal crude flows. 

Brent traded below US$110 a barrel after Friday hitting the milestone for the first time since May, West Texas Intermediate was near US$101 and European natural gas jumped as much as 2%. In the Middle East, a Saudi helicopter crashed near the border with Yemen and Houthi rebels targeted Yanbu, a crucial export hub, while UK maritime operations said two tankers reported being hit in the Persian Gulf. 

Meanwhile, US President Donald Trump said he cut a diesel export deal with Russia and delayed imposing further sanctions to preserve peace talks with Ukraine. US lawmakers introduced a bill on Friday to block the deal, which has also been criticized by Republicans. Moscow and Kyiv traded tit-for-tat attacks on energy infrastructure.

Brent has surged about 80% this year as the widening hostilities in the two regions revived concerns over supply. Physical markets continue to signal tightness and refined products such as diesel have rallied even harder, with European futures for the commodity more than doubling this year.

“Mounting attacks on energy infrastructure and vessels are eroding hopes of a sustained recovery in oil flows,” said Jorge Leon, head of geopolitical analysis at Rystad Energy. “The market is increasingly pricing in a longer disruption, with risks to prices tilted to the upside heading into the week.” 

Nevertheless, barrels do seem to be exiting the Persian Gulf. The US said over the weekend that its forces helped escort more than 100 million barrels of oil through the Strait of Hormuz over the prior week.

uploaded by Isabelle Francis