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Oil prices rose in the international market on Monday, over speculations of supply disruption due to British tanker seizure in the Strait of Hormuz. Benchmark Brent crude futures jumped by 1.4% to $63.32 a barrel. US WTI futures were priced 0.8% higher at $56.10. Both the futures recovered from the sharp downfall last week. Oil prices were also supported by the force majeure on Libya’s largest oilfield, El-Sharara.
Iran detained two British oil tankers traveling through the Strait of Hormuz on Friday, worsening tensions with London and Washington. Naval forces from Iran’s Islamic Revolutionary Guard Corps detained and sent the British-flagged tanker Stena Impero to Iranian shores for legal procedures. The tanker was seized on the claims of not following international maritime regulations while transiting the strait. The British Government has cautioned of a “considered and robust” response.
With tensions brewing in the Middle East after a U.S. Navy ship destroyed an Iranian drone, oil prices jumped in the international market on Friday. Brent crude LCOc1 futures rose 1.3%, to $62.74 a barrel. US West Texas Intermediate crude CLc1 futures climbed 1.1%, to $55.89 per barrel. Washington yesterday said that an Iranian drone in the Strait of Hormuz threatening a U.S. Navy ship was “destroyed”.
As Iran seeks new possibilities of growth amidst debilitating U.S. sanctions, the country’s ambassador to India has said that Iran is ready to invest in the expansion of a South Indian refinery. Chennai Petroleum (CPCL) seeks to invest about $5.1 billion to expand Nagapattinam refinery to a 180,000-bpd plant. Naftiran Intertrade, the Swiss subsidiary of National Iranian Oil Company, own a 15.4% stake in CPCL.
Iran has made it very clear that nothing will stop the nation to export its oil. Foreign Minister of Iran, Mohammad Javad Zarif told its British counterpart that "Iran will continue its oil exports under any conditions". He has also appealed to Britain for releasing the Grace 1 oil tanker. This tanker was seized last week by the British Royal Marines.
British tanker faced obstruction from Iranian boats in the Strait of Hormuz. The vessel "British Heritage" was reported to be near the island of Abu Musa when Iranian boats tried to impede it. "We are concerned by this action and continue to urge the Iranian authorities to de-escalate the situation in the region", said the UK Defence Ministry. However, Iran’s Islamic Revolutionary Guard Corps (IRGC) has refused involvement in this incident.
One of the BP-run oil tankers is sheltering inside the Persian Gulf amidst fears of Iranian retaliation to the arrest in Gibraltar last week. The British Royal Marines seized a vessel hauling the Islamic Republic’s crude. BP-chartered British Heritage was on its due course towards Basrah terminal when it made an unexpected turn on July 6. BP is thought to be concerned about becoming a target of Iranian retaliation.
Oil prices soared more than 1% in the international market on Wednesday, supported by an unexpected drop in US crude stockpiles. Brent crude futures jumped 1.3% to $65.91 a barrel. US WTI crude futures were up by 1.8% to $58.98 per barrel. API data released on Tuesday showed an unexpected fall of 7.5 million barrels in US crude stockpiles last week to 474.5 million.
On Tuesday, oil prices were dragged down by the concerns of crude demand outlook. But the market received support when new sanctions were announced by Washington on Iran. Brent decreased by 0.9% and was traded at $64.29 a barrel. WTI fell by 1% and was traded at $57.32 a barrel. Further, the Federal Reserve Bank of Dallas on Monday revealed slacking manufacturing data which increased the crude demand worries.
Oil prices continued its uphill journey in the international market, supported by the growing tensions in the Middle East. International benchmark, Brent crude futures rose by 0.4% to $65.45 a barrel. US West Texas Intermediate crude climbed by 0.6% to $57.80 a barrel. U.S. Secretary of State Mike Pompeo has indicated imposition of “significant” sanctions on Tehran on Monday. Oil prices jumped last week after Iran shot down a US military drone.
Operators of the two oil tankers attacked in the Gulf of Oman last week are undergoing examination off the UAE coast. The oil tanker explosion on Thursday escalated tensions between Washington and Iran, with the former blaming the Persian country for the assault. Once the authorities in Sharjah conclude security checks, Japanese tanker Kokuka Courageous will undergo assessment, post which ship-to-ship transfer of its methanol cargo would begin.
Two oil tankers sailing in the Gulf of Oman were caught in explosions on Thursday. While the reason for explosions on the Norwegian-owned Front Altair or the Japanese-owned Kokuka Courageous is still unknown, the US has blamed Iran for the incident. The unidentified attacks on the tankers have stoked fear and triggered alarms about immediate security and potential military conflict between the US and Iran.
US sanctions has pushed a lot of countries into submitting to Trump administration’s bid to drive down oil imports from Iran and Venezuela to zero. The latest to comply with the US sanctions is India. India’s Ambassador to the US, Harsh Vardhan Shringla informed that the South Asian country had ended oil imports from Iran and Venezuela, despite being dependent on Iran for 10% its oil needs.
Oil guzzler, Indian Oil Corp. has said that it will assess the effects of US sanctions on the proposed Iranian investment in the CPCL expansion project. IOCL plans to pull down the Nagapattinam refinery and build a new refinery of 9 million tonnes unit in the upcoming five to six years. While the previously made investments by NIOC will not draw any impact, NIOC’s new investments will remain under scrutiny.
In a bid to make up for the supply loss of Iranian oil due to US sanctions, oil guzzler IOCL has availed the option of receiving an extra 2 million barrels of crude from Saudi Aramco. Under the deal, the state-run refiner will get the extra crude supply for every month between July-December. IOCL entered into a term deal to purchase 5.6 million tonnes of Saudi crude in 2019/20.
After Yemen's Iran-aligned Houthi militia claimed responsibility for the attacks on Saudi oil pumping stations, Saudi's Deputy Defence Minister has slammed Iran. On Thursday, he accused Iran of arranging this attack. Prince Khalid Bin Salman tweeted that this "proves that these militias are merely a tool that Iran's regime uses to implement its expansionist agenda". However, UAE has not taken any names yet, for the incident is still under investigation.
After the US exempted all the Iran sanction waivers from the major oil importing countries, Aramco has stepped up to help the nations meet the shortages. According to the sources, the world's largest oil company has offered increased crude oil supplies to India by 200,000 barrels a day (bpd). This will help India meet almost half of its oil imports that were coming from Iran.
Tanker arrival data available with news firm, Reuters has revealed that the Iranian oil imports to India dropped approximately 57% year-on-year in April. New Delhi received about 277,600 barrels per day (bpd) of oil from the Persian country last month, down about 31.5% from March. India was amongst the eight nations who received a six-month waiver from US sanctions introduced in November.