Even Hurricanes in North and Central America... Will Oil Prices Rise? [Weekend Money]

WTI falls 1.3% as strategic reserve releases accelerate
Gulf of Mexico production disruptions and Red Sea risks add upward pressure

As a hurricane approaches the United States, concerns about international oil prices are mounting again. On one side, production is being cut to avoid the storm; on the other, strategic reserves are being tapped. Analysts say it is becoming difficult to predict where oil prices will go amid shrinking supply and new volumes set to enter the market.

Kim Gwangrae, a researcher at Samsung Securities, said oil prices were fluctuating as geopolitical concerns were factored in amid a recovery in Middle Eastern exports and moves to expand strategic reserve supplies. On Oct. 7 local time, Brent crude for December delivery settled at $100.20 a barrel, down 0.38% from the previous session, while West Texas Intermediate (WTI) crude for November delivery closed at $88.28 a barrel, down 1.3%.

One factor weighing on oil prices is the International Energy Agency's (IEA) move to accelerate the release of strategic reserves. IEA member countries agreed to quickly supply about 100 million barrels that have yet to reach the market from the volumes pledged in March. The move is intended to bring forward supplies and address the immediate shortage.

On the other side, Tropical Storm Isaias is threatening supply. The U.S. National Hurricane Center forecast that Isaias would strengthen into a hurricane and approach the U.S. Gulf Coast, including Mississippi, Alabama and Florida. "The projected path includes offshore fields in the Gulf of Mexico, which account for about 15% of U.S. crude oil production. Production disruptions could total as much as 11.2 million barrels over the duration of the storm," Kim said. "Onshore refineries could also face operational disruptions, making the storm a key short-term factor for oil prices."

Sea routes are also a source of concern. Kim said clashes between Yemen's Houthi rebels and Saudi Arabia were increasing the risks to oil transportation around the Red Sea. Since the Red Sea serves as a major alternative export route for Saudi oil following disruptions in the Strait of Hormuz, it is important to monitor whether the clashes affect actual shipping operations. Even if oil is extracted from fields, supply shortages will be difficult to ease if it cannot be transported on time.

U.S. inventories also offered little room for comfort. According to the report, U.S. commercial crude oil inventories fell by 3.2 million barrels last week. The market had expected an increase of 1.7 million barrels, but the result was the opposite. "The decline was driven by a sharp increase in crude oil exports and higher crude input at refineries," Kim said. "Although the refinery utilization rate rose to 92.7%, supply and demand for petroleum products remain tight, which supports higher oil prices."

This content was produced with the assistance of AI translation services.