Crude Market Trends: Basrah, Brent, WTI Shift Amid Tensions

Key Takeaways

• Market Response to Tensions: Oil prices dipped last week due to rising Middle East tensions, although October saw monthly gains for Brent and WTI.
• Demand Concerns: China’s slowing economy and refinery output raise demand concerns, while the U.S. reported record crude production.
• OPEC+ Commitment: Russia and Kazakhstan pledge adherence to OPEC+ schedules, aiming to stabilize the market.

Weekly Crude Oil Price Trends

• Basrah crude oil recorded slight weekly losses last week, while global oil benchmarks Brent and West Texas Intermediate (WTI) also fell under pressure from escalating Middle East tensions.
• Basrah Heavy crude concluded its latest session on Friday with an increase of $1.13, closing at $69.11 per barrel, marking a weekly loss of $0.36, or 0.52%.
• Basrah Medium rose by $1.13 in the same session, closing at $72.26 per barrel, with a weekly loss of $0.36, or 0.50%.
• Global oil prices recorded weekly losses as geopolitical tensions rose, with reports indicating that Iran may launch a retaliatory strike against Israel in the coming days, threatening potential supply disruptions.
• Brent crude posted a 3.8% weekly loss, while WTI recorded a 3.2% decline over the same period.
• Despite the recent drop, both Brent and WTI saw monthly gains in October, with Brent up 2% and WTI rising 2.2%, supported by geopolitical factors in the Middle East and anticipation around the upcoming US elections.

Petroleum Demand and Supply: Demand Outlook and Production Records

• "While markets appear to have focused on reports that the U.S. urged Israel not to target oil infrastructure, driving the latest price easing, these risks remain high as rhetoric remains heated," Citi analysts wrote.
• Citi also noted downward demand revisions this week by OPEC and the IEA, as well as the return to normal of Libyan oil production, while saying the potential impact of China's emerging economic stimulus plans on oil demand is uncertain.
• China's economy grew by 4.6% in Q3, the slowest pace in 18 months, and the country's refinery output fell for the sixth straight month, adding to concerns over sluggish oil demand in the world's second largest economy that have been weighing on oil prices.
• In the U.S., crude production smashed another record, as the EIA reported a 100k bbl/day rise last week to 13.5M bbl/day, compared to the previous peak of 13.4M bbl/day first achieved two months ago.
• Helping to put a floor under prices, the EIA also said U.S. crude oil, gasoline and distillate inventories fell last week.

Petroleum News: Impact of Geopolitical Tensions on Oil Prices

• The Trump campaign is working to distance itself from crude and racist remarks made by comedian Tony Hinchcliffe during a rally in Madison Square Garden that triggered an outcry from the Puerto Rican community.
• During former President Donald Trump’s rally on Sunday, Hinchcliffe made distasteful jokes about Latinos and called Puerto Rico, “a floating island of garbage.”
• The remarks were made the same month Trump visited Knockout Barbershop off Castle Hills Avenue in the Bronx to garner support from the Puerto Rican community.
• Javiel Rodriguez Jr., the owner of Knockout Barbershop, said hosting Trump for a Q&A this October was an opportunity he couldn’t pass up. He said it’s not often presidential candidates visit their neighborhood to learn about their concerns. He described Trump as down to Earth but admitted the jokes made at his rally about Puerto Ricans following his visit didn’t land well.

Expert Opinion

It is anticipated that Russia and Kazakhstan are reaffirming their full commitment to the OPEC+ agreement, as well as to compensating for excess oil production according to updated schedules to be submitted to the OPEC Secretariat. Freight rates for tankers carrying Russia's flagship Urals crude from its Baltic ports to India have stalled on expectations of declines in oil exports from Moscow's western ports in November.