Crude Prices Climb on Geopolitical Risks from Russia and Iran

December WTI crude oil (CLZ25) on Friday closed up +1.40 (+2.39%), and December RBOB gasoline (RBZ25) closed up +0.0519 (+2.65%).

Crude oil and gasoline costs rallied on Friday, recovering a few of Wednesday’s sharp sell-off.  Considerations about international oil provides are bullish for crude costs after Ukraine on Friday launched drone and missile assaults on Russia’s key oil export port of Novorossiysk, the place Russia shipped about 700,000 bpd in September and October.  Ukraine additionally attacked the Rosneft Saratov refinery in Russia’s Volga area on Friday, which processes about 140,000 bpd.

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As well as, Friday’s Iranian seizure of an oil tanker within the Gulf of Oman has heightened geopolitical dangers within the Center East and pushed crude costs larger.  

Lowered crude exports from Russia are supportive of oil costs.  Ukraine has focused no less than 28 Russian refineries over the previous three months, exacerbating a gasoline crunch in Russia and limiting Russia’s crude export capabilities.  Ukrainian drone and missile assaults on Russian refineries and oil export terminals curbed Russia’s complete seaborne gasoline shipments to three.45 million bpd within the 4 weeks to November 9, down by -130,000 bbl from the prior week and the bottom in two months.  Ukraine has knocked out 13% to twenty% of Russia’s refining capability by the top of October, curbing manufacturing by as a lot as 1.1 million bpd.  New US and EU sanctions on Russian oil firms, infrastructure, and tankers have additionally curbed Russian oil exports.

On Wednesday, crude costs tumbled to a 3-week low after OPEC revised its Q3 international oil market estimates from a deficit to a surplus, as US manufacturing exceeded expectations and OPEC additionally ramped up crude output.  OPEC mentioned it now sees a 500,000 bpd surplus in international oil markets in Q3, versus final month’s estimate for a -400,000 bpd deficit.  Additionally, the EIA raised its 2025 US crude manufacturing estimate to 13.59 million bpd from 13.53 million bpd final month.

As a bearish issue, Saudi Arabia final Thursday lowered the worth of its predominant crude grade to Asia for supply subsequent month to the bottom stage in 11 months.  

Power in crude demand from China, the world’s second-largest oil client, is supportive of costs, after a report final Friday confirmed that China’s Jan-Oct crude imports rose +3.1% y/y to 471 MMT.  

Oil costs have acquired assist on current stories that the US navy could also be on the verge of launching navy strikes on Venezuela, which is the world’s Twelfth-largest oil producer.

OPEC+ at its November 2 assembly introduced that members will elevate manufacturing by +137,000 bpd in December however will then pause the manufacturing hikes in Q1-2026 because of the rising international oil surplus.  The IEA in mid-October forecasted a file international oil surplus of 4.0 million bpd for 2026.  OPEC+ is making an attempt to revive the entire 2.2 million bpd manufacturing lower it made in early 2024, however nonetheless has one other 1.2 million bpd of manufacturing left to revive.  OPEC’s October crude manufacturing rose by +50,000 bpd to 29.07 million bpd, the best in 2.5 years.

Vortexa reported Monday that crude oil saved on tankers which have been stationary for no less than 7 days rose +11% w/w to 95.18 million bbls within the week ended November 7.

Thursday’s EIA report confirmed that (1) US crude oil inventories as of November 7 had been -4.1% beneath the seasonal 5-year common, (2) gasoline inventories had been -4.0% beneath the seasonal 5-year common, and (3) distillate inventories had been -7.9% beneath the 5-year seasonal common.  US crude oil manufacturing within the week ending November 7 rose +1.5% w/w to a file excessive of 13.862 million bpd.

Baker Hughes reported Friday that the variety of energetic US oil rigs within the week ending November 14 rose by +3 rigs to 417, modestly above the 4-year low of 410 rigs set on August 1.  Over the previous 2.5 years, the variety of US oil rigs has fallen sharply from the 5.5-year excessive of 627 rigs reported in December 2022. 

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