(Bloomberg) — Oil held gains near $100 a barrel as traders watched for details of an Iranian deal with Oman to manage shipping through the Strait of Hormuz, while strong Chinese buying tightened the market.
Global benchmark Brent crude has risen 1.6% over the past two sessions, while West Texas Intermediate was above $92. Iran said the accord is imminent and will include a temporary safe route through the strait, raising questions about how the US would respond after it struck Iranian tankers over the weekend. Tehran warned that ships face the risk of attack near Oman.
Renewed fighting between the US and Iran over the past week has pushed up oil futures due to due to concerns about deeper disruptions to energy flows through Hormuz. Chinese refiners have recently ramped up oil buying, driving up prices of African, Canadian and Latin American crude, although the increase doesn’t necessarily signal a revival in longer-term demand.
Brent has surged more than 30% since the conflict began at the end of February, although it’s well below the high of $126 a barrel reached in late April. Refined fuels such as diesel have rallied even further as the Russia-Ukraine war added to tightness. Despite risks to shipping in Hormuz, oil continues to exit the Persian Gulf.
Roughly 7 million barrels a day of crude and refined fuels are crossing Hormuz, Macquarie Group Ltd. said Monday, citing conversations with clients. That compares with pre-war levels of about 20 million. US officials have repeatedly pointed to robust exports.
Iran and Oman have been seeking to formalize control of the strait, and could eventually charge transit fees. The US, which is blockading Iranian ports to curb exports from the Islamic Republic, wants the waterway to return to its pre-war status as a freely navigable waterway.
Saudi Aramco’s oil facilities in Jazan near the Red Sea came under fresh attack on Monday, although the strike didn’t cause major damage, according to people familiar with the matter. It was the latest in a series of attacks that have already forced a major refinery in the area to halt operations.
Meanwhile, traders and industry executives are gathering in Singapore for the Asia Pacific Petroleum Conference, which kicks off on Tuesday. Key topics are likely to include restricted crude flows through Hormuz, tightening global inventories and China’s demand outlook.
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