Tag Archive for: oilandgasprices

Oil and gas prices have surged as Iran continues to launch strikes across the Middle East in response to ongoing attacks by the US and Israel.

Two vessel incidents in the Strait of Hormuz lift oil shipping costs

Two commercial vessels were struck by projectiles near the Strait of Hormuz, a major shipping corridor between Iran and Oman that carries roughly a fifth of the world’s oil and significant LNG volumes. The incidents added to broader disruption in Gulf waters, with shipping data showing many crude and LNG carriers waiting offshore rather than transiting the area.

As risks increased, multiple marine insurers moved to cancel war-risk coverage for vessels operating in Iranian and nearby Gulf waters starting March 5, a step that can raise insurance and freight costs for cargoes moving from the Middle East. Tanker rates on key routes have climbed sharply this year, and oil prices rose as markets reacted to tighter near-term logistics and higher transport costs. For mineral and royalty owners, pricing and differentials can influence revenues over time, alongside market factors that shape payments (see how natural gas prices influence royalty payments and understanding oil and gas royalties).

Source: BBC News
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Fed rate cut

Fed rate cut hikes oil and gas prices

While markets expected the US Federal Reserve to cut (Fed rate cut) interest rates this week, the magnitude of the change, a 0.05% reduction, was unexpected. The announcement sent higher equities, which spurred crude markets as economic growth cannot occur without an increase in energy consumption.

Stepped-up attacks on Hezbollah by Israel and an inventory draw also played a role in supporting the rally. Furthermore, the US is back in the oil market as the US Department of Energy (DOE) announced its intent to purchase up to 6.0 million bbl to replenish the Strategic Petroleum Reserve (SPR) with deliveries occurring during first quarter 2025.

However, while higher week-on-week, prices remained capped by ongoing concerns over demand in China as its central bank decided not to lower key interest rates despite a sluggish economy and despite the move by the US government. The high for WTI of $72.50/bbl was set on Thursday while the low was Monday’s $68.65/bbl.

Brent crude also stair-stepped higher with $75.20/bbl as its high on Thursday and the week’s low of $71.50 on Monday. Substantial buying interest was seen when Brent dipped below $70/bbl the prior week, suggesting a key level of support. Both grades of oil look to settle higher week-on-week. The WTI/Brent spread tightened to -$3.52.

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Source: Oil & Gas Journal

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