Saudi-led coalition destroys weapons depots in Yemen’s Hodeidah province
Oil markets entered Tuesday’s session weighing improving Middle Eastern crude flows against a fresh round of attacks on shipping in the Strait of Hormuz and renewed fighting near the Bab al-Mandeb Strait. December Brent crude futures fell 0.4% to $99.88 a barrel, while December West Texas Intermediate futures fell 0.8% to $87.54 a barrel.
Middle Eastern crude flows are improving, with regional exports exceeding prewar levels on several days in late September as producers used alternative routes and logistical adjustments to keep barrels moving, Priyanka Sachdeva at Phillip Nova said. Still, “renewed tanker attacks around the Strait of Hormuz are keeping shipping, insurance, routing and security risks elevated,” she said.
“Higher Middle East exports, lower Chinese imports and rising supply from producers outside the Organization of the Petroleum Exporting Countries and its allies point toward potentially oversupplied crude markets,” Commonwealth Bank of Australia’s Vivek Dhar said. However, “traders appear reluctant to fully price in that outlook because the recent increase in Middle East exports may not be sustainable,” he added.
The recovery has remained uneven across the oil market. The seven-day average for crude shipments through the Strait of Hormuz stood at 10.3 million barrels a day as of Saturday, or 76% of prewar levels, according to Kpler data cited by The Wall Street Journal. Refined products such as diesel and gasoline accounted for 11% of overall flows through the strait, down from more than 20% before the conflict, as damage to Middle Eastern refineries continued to constrain fuel supplies.
Shipping risks remain elevated. The U.K. Maritime Trade Operations said a tanker entering the Strait of Hormuz on Monday was hailed by Iran’s Islamic Revolutionary Guard Corps about 11 nautical miles north of Khasab, Oman, and instructed to turn back or risk being targeted. The vessel complied. Later Monday, another tanker in the strait was struck by an unknown projectile, causing a fire in its engine room, UKMTO said. No casualties or environmental impact were reported at the time.
Tensions have also increased around the Red Sea. Saudi and Yemeni forces have pressed a counteroffensive aimed at retaking the strategic port city of Mokha from Houthi fighters and easing threats to energy exports through the Bab al-Mandeb Strait, The Wall Street Journal reported. Separately, Saudi-led coalition naval forces carried out an operation in Yemen’s Hodeidah province that destroyed weapons depots, storage facilities for explosive-laden boats and naval mines, according to the Saudi Press Agency. The coalition said the operation thwarted planned attacks on waterways in the southern Red Sea and was intended to protect navigation through Bab al-Mandeb.
U.S. Central Command said Monday that its forces had redirected the 130th commercial vessel as part of the U.S. naval blockade against Iran. Centcom said the blockade, which resumed July 14, has also seen U.S. forces disable three vessels that refused to comply and destroy 13 vessels over the past 12 weeks that it said either violated the blockade or were part of the Islamic Revolutionary Guard Corps’ network.