Oman oil price over $121 per barrel as Middle East conflict escalates

Muscat: The official price of Oman oil for delivery in next November again rose by $5.15 to settle $121.68 per barrel on Wednesday as Middle East conflict escalates. On Tuesday he official selling price of Oman crude had surged by 11.5 percent per barrel.

This is Oman oil’s highest level since April on the back of attacks on Saudi energy facilities and rising tensions between the US and Iran leading to serious concerns over oil supply from the Middle East.

Meanwhile, in Asia trading oil prices climbed more than $1 in early trading as the Middle East conflict widened, heightening concerns over supply disruptions on Wednesday.

In Singapore, Brent crude futures rose $1.57, or 1.6 percent, to $99.49 a barrel, while US West Texas Intermediate (WTI) crude gained $1.60, or 1.72 percent, to $94.63 a barrel.

Brent has surged about 25 percent since early August, as hopes for a lasting resolution to the six-month-old war have faded and hostilities have reignited.

“The ongoing clashes in the Middle East have lifted oil prices beyond $95 per barrel and supply fears are at odds with the market’s surprisingly stable workings,” said Norbert Rücker, Head Economics and Next Generation Research, Julius Baer.

“Exports out of the Middle East and global oil storage are holding up well. The perception gap suggests that there is an exceptionally bloated risk premium embedded in prices,” he further added. 

The images of attacked and capsized oil tankers have had an impact and the ongoing hostilities in the Middle East have helped in spiking oil prices. The key question is whether the latest tensions will evolve into a more serious escalation and threat to global energy supplies, Norbert Rücker said, adding that, “So far, developments seem to be following the pattern of previous clashes, which proved temporary and left no lasting consequences.”

“The US attacks were aimed at constraining Iran’s ability to interfere in Hormuz shipping and are part of a strategy to lift the economic costs for its regime. Iran’s counter-strikes targeted mainly military infrastructure and were largely intercepted,” he further added.