October WTI crude oil prices rose by $5.67 (+5.90%) on Wednesday, hitting a 3.5-month high, while October RBOB gasoline prices increased by $0.1572 (+4.90%), marking a 2-week high. This surge is driven by escalating tensions in the US-Iran conflict, which threatens to limit energy exports from the Middle East, resulting in tighter global oil supplies. Despite a bearish weekly EIA inventory report, the market remains supported by fears of a prolonged conflict and disruptions from Houthi attacks in Saudi Arabia.
Saudi Arabia reported its crude production fell to 6.238 million barrels per day (bpd) in August, the lowest since 1990, while global oil exports from the Middle East are down about 2 million bpd. Russia’s crude production and exports are also affected by ongoing drone attacks from Ukraine. The International Energy Agency has indicated that global oil supply deficits will worsen, predicting a significant decline in inventories due to these geopolitical tensions.
As of the latest EIA report, US crude oil production hit a record 13.947 million bpd, and US crude inventories were 0.1% above the seasonal 5-year average. However, gasoline inventories were reported to be 5.5% below the seasonal average, and distillate inventories fell 14% below the 5-year average. The number of active US oil rigs increased to 449, short of the recent peak.
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