Oil Prices Rise as Chinese Refiners Suspend October Fuel Exports
Brent crude climbed back above $100 per barrel following reports of suspended Chinese fuel shipments and ongoing Middle East supply concerns.
Quick Look
Oil prices rose on Thursday, reversing earlier losses, as Brent crude topped $100 per barrel following a report that Chinese refiners suspended October fuel exports amidst constrained global energy markets.
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Why It Matters
Global energy markets face supply disruptions from ongoing conflicts involving the U.S., Iran, Russia, and Ukraine.
Oil prices rose on Thursday, reversing earlier losses, following a report that Chinese refiners have suspended October fuel exports, further squeezing war-constrained energy markets.
International benchmark Brent crude with December expiry was last seen trading 2.4% higher at $100.36 per barrel, having earlier traded 1% lower, while U.S. West Texas Intermediate futures with November expiry rose 2.5% to $92.70.
Reuters reported that China's state oil major PetroChina canceled a handful of gasoline and jet fuel shipments that were planned for October, citing multiple unnamed sources, as Beijing looks to safeguard domestic supplies. CNBC could not independently verify the report.
Global energy markets have been grappling with supply disruptions from the U.S.-Iran war in the Middle East and Russia's full-scale invasion of Ukraine.
Oil prices had moved higher earlier in the session as investors parsed a recovery in Middle East crude exports.
UOB in a note Thursday said that crude flows from Middle East were reportedly nearing pre-war levels, but fuel supplies, particularly gasoline, were lagging behind.
Worries over crude supply disruptions have eased following the resumption of oil tanker loadings by Saudi Arabia from its Red Sea port of Yanbu after the kingdom restarted operations on its East-West Pipeline.
"The pipeline has done much of the heavy lifting when it came to moving crude out of the Gulf," given that Iran has blocked the Strait of Hormuz, said David Morrison, senior market analyst at Trade Nation on Wednesday.
"Analysts say that the pipeline is nowhere near running at full capacity. But the fact that it is open provides some relief and has helped oil prices retreat," Morrison added.
Traders continue to keep a close eye on developments in the Middle East amid concerns that a lasting resolution to the Iran conflict may be delayed, with U.S. Secretary of State Marco Rubio ordering the Iranian delegation visiting America to leave as the UN General Assembly was over, according to MS Now.
U.S. and Iranian officials had reportedly held separate indirect talks with mediators on Monday, while in New York for the UNGA.
Open Questions
- Will China officially confirm the suspension of fuel exports?
- How long will the Strait of Hormuz remain blocked?
