Oil prices fall nearly 25% in a month despite Iranian tanker attacks

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Oil prices fall nearly 25%

Gulf countries increase oil production

Saudi Arabia reported producing 10.5 million barrels of oil per day in October. The kingdom had reached that production level only once since 2022.

Iraq and Kuwait also increased output, while the United Arab Emirates gained the ability to expand production without restrictions under OPEC quotas.

Producers outside the region provided additional support to global supply. Weekly U.S. oil production exceeded 14 million barrels per day for the first time, while Brazil and Guyana set new production records.

On November 13, the IEA reported that global supply had exceeded demand for the first time since the war with Iran began. The agency described the development as the first signs of a return to balance in the oil market.

Producers have already begun cutting their selling prices to attract buyers. Abu Dhabi National Oil Co. lowered the price of its main crude grade, while Saudi Arabia also reduced prices for key shipments.

The recovery in exports was supported by ship-to-ship oil transfers in the Gulf of Oman. This arrangement allows shipments to continue despite persistent threats to shipping through the Strait of Hormuz.

Tanker attacks continue to pose risks to the oil market

Despite increased supplies, the situation in the region remains unstable. Attacks on vessels in November killed at least one sailor, while oil spills affected the Persian Gulf coastline.

Transportation costs also remain elevated. Shipping U.S. crude to Asia adds approximately 20% to its price, more than double the figure recorded a year earlier.

However, falling prices are not solely the result of increased supply. According to oil trader Vitol, the war with Iran has reduced global oil consumption by approximately 3 million barrels per day.

In October, China's oil imports fell approximately 15% year over year to 9.9 million barrels per day. European countries also reported double-digit declines in diesel demand.

New military incidents are creating additional uncertainty. Iran's Islamic Revolutionary Guard Corps claimed responsibility for an attack on a U.S. early-warning radar station in Bahrain following an alleged strike on a telecommunications tower in southern Iran.

The escalation comes amid continued attacks on commercial vessels and infrastructure facilities in Saudi Arabia. These developments maintain the threat of further disruptions to oil exports through the Strait of Hormuz despite the recovery in supplies.

Earlier, we reported that the U.S. Treasury Department urged the Federal Reserve to refrain from raising interest rates because of the energy shock caused by the war with Iran.

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