China Halts Oil Exports, U.S. Boosts Middle East Troops... Oil Prices Surpass $100
International oil prices have surged amid news that Chinese oil refiners have suspended petroleum product exports and that the United States is planning additional troop deployment to the Middle East. As the Middle East conflict is now expected to extend into the new year, concerns are mounting about further escalation due to additional U.S. attacks and Iran's potential response. This is leading to forecasts that oil prices will remain highly volatile for the time being.
On October 1 (local time), December Brent crude futures on the London ICE Futures Exchange closed at USD 102.31 per barrel, up 4.37% from the previous session. At the New York Mercantile Exchange, November West Texas Intermediate (WTI) crude finished at USD 92.87 a barrel, up 2.71% from the previous trading day.
With global petroleum product supplies already tight, concerns that military tensions could flare again in the Middle East have pushed oil prices higher. According to foreign media, Chinese refiners have halted petroleum product exports this month to destinations excluding Hong Kong and Macau. This move follows the Chinese government's decision not to issue export permits for the month, and refiners are reportedly waiting for additional guidance.
In addition, the news of further U.S. troop deployments in the Middle East has added upward pressure to oil prices. The Wall Street Journal (WSJ) cited U.S. officials as saying that the Department of Defense plans to send a third aircraft carrier strike group and Marine amphibious ships to the region, and to increase troop levels by between 9,000 and 10,000 personnel.
As military tensions continue in the Middle East, international oil prices have risen amid heightened volatility. Brent crude, which hovered in the mid-90s per barrel early last month, surpassed USD 100 per barrel on this day. WTI even soared to above USD 102 per barrel during intraday trading last month.
As instability in the Middle East persists, Wall Street firms have continued to revise their oil price forecasts upward. According to a Wall Street Journal survey compiling estimates from Goldman Sachs, JPMorgan, Morgan Stanley and others, the average price for Brent crude in the fourth quarter of this year is projected at USD 90.22 per barrel, and WTI at USD 85.47 per barrel. This marks a significant upward revision from previous forecasts of USD 78.92 for Brent and USD 74.62 for WTI. Peter Cardillo, economist at Spartan Capital Securities, stated, "Although oil shipments through the Strait of Hormuz have improved, supply concerns remain a major focus for the market as the conflict drags on."
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Particularly burdensome is speculation that U.S. President Donald Trump is considering expanding attacks on Iran after the midterm elections. Among analysts, the view is spreading that the conflict could last well into the new year. Walt Chancellor, an energy strategist at Macquarie Group, said, "The probability of the conflict being resolved in a comprehensive and lasting manner in the near term does not seem high."
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