On Thursday, November WTI crude oil closed up +$2.45 (+2.66%) at $93.23 per barrel, while November RBOB gasoline dropped -$0.0074 (-0.22%) to $3.33 per gallon. The sharp rise in crude prices was driven by heightened tensions after Iran threatened to widen conflicts in the Middle East, leading to concerns over the security of energy supplies through the Strait of Hormuz.
Saudi Arabia’s production hit a 33-year low, averaging 6.238 million bpd in August. Following missile attacks from Houthi rebels, Saudi Arabia temporarily shut its East-West pipeline, which handles 7 million bpd of crude. Current negotiations mediated by Qatar between the U.S. and Iran aim to potentially lift the Iranian blockade, although the U.S. Secretary of State indicated ongoing tensions, complicating these discussions.
Global oil markets are tightening, with estimated losses of around 2 million bpd in Middle Eastern crude exports and another 2 million bpd from Russian output due to ongoing attacks. Meanwhile, the International Energy Agency has projected the largest drop in global oil demand since the Covid-19 pandemic, revising its global oil deficit estimate for 2023 to 1.7 million bpd.
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