Growing geopolitical tensions between the US and Iran amid ongoing supply-side uncertainties appear to be boosting oil prices after all, says Commerzbank analysts. May started off with US President Donald Trump’s administration increasing pressure on Iran by ending sanctions waivers to Iranian oil buyers, including India.
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The past week jolted the world to attention with attacks on Middle East oil infrastructure. However, Total CEO Patrick Pouyanne downplayed the risks of the rising tensions between the two countries and in the Middle East. Pouyanne said the boost in crude oil prices could be due to operational risks.
“It could add some risks on some of our activity, at the same time it pushes the price of oil up. Globally speaking for Total, its not so bad. May be its bad for some consumers. But I suspect these tensions are just pushing the price up and up and up. So we’ll see.”
This week, as per global reports, crude prices reacted sharply to the apparent ‘sabotage attacks’ on oil tankers in the Persian Gulf and drone attacks on two pumping stations along Saudi Aramco’s East-West pipeline. The attacks were followed by the US State Department announcing that it was removing non-emergency staff from Iraq.
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In retaliation, the Saudi-led military coalition in Yemen carried out several airstrikes on the Houthi-held capital, Sanaa, yesterday, after the Iranian-aligned movement claimed responsibility for the drone attacks on two oil pumping stations.
Moreover, escalation of tensions has compounded fears of supply disruption in the Middle East. Asian shippers and refiners have put ships heading to the Middle East on alert and are expecting a possible rise in marine insurance premiums after the attacks.