Oil Prices Inch Higher, Brent Nears $90 on Peace Talks Doubt
Oil prices rose on Tuesday as renewed concerns over a potential escalation between the US and Iran, a sharp decline in US strategic crude reserves and repeated attacks on oil facilities in Libya heightened supply concerns.
International benchmark Brent crude futures for October traded at $89 per barrel, up 1.4% from the previous close of $87.72. US benchmark West Texas Intermediate (WTI) futures for September traded at $83.51 per barrel, up 1.7% from $82.11 in the previous session.
US President Donald Trump on Monday declined to elaborate on the next steps in negotiations with Iran while signalling that Washington retains the ability to pursue a major military escalation if talks fail.
Speaking to reporters at the White House, Trump responded, “You’ll find out,” when asked what would follow the latest round of negotiations, which he had previously described as Iran’s “last chance” before possible military action.
Asked whether a “massive escalation” remained an option, Trump said the US had the capability to pursue such a course if necessary.
Trump also said Washington would seek compensation for damage he said Iran had caused over the past 50 years.
“If there’s damages to be paid, I think Iran should pay those damages.”
The remarks renewed concerns over a potential escalation between Washington and Tehran, increasing uncertainty over oil supplies from the Middle East and putting upward pressure on crude prices.
Prices also gained support from a continued decline in US Strategic Petroleum Reserve (SPR) stocks, raising concerns over the country’s emergency supply buffer.
SPR inventories fell by 6.1 million barrels last week to 298.7 million barrels, their lowest level since 1983, according to US Department of Energy data released Monday.
The reserve held 105.3 million barrels of sweet crude and 193.4 million barrels of sour crude as of Aug. 7. The latest decline followed a draw of about 2.8 million barrels in the previous week, when inventories stood at 304.8 million barrels.
The drawdowns are part of Washington’s commitment to release 172 million barrels from the SPR under a coordinated action by International Energy Agency member countries aimed at addressing global supply disruptions and elevated energy prices.
The broader initiative involves the release of 400 million barrels of oil and refined products from participating countries’ emergency reserves.
Meanwhile, repeated drone attacks targeting oil facilities in Libya heightened concerns over potential disruptions to the country’s oil output and exports.
A drone targeted an oil facility in Libya’s western city of Zawiya, marking the third such incident since Sunday, the National Oil Corporation (NOC) said early Tuesday.
The remotely operated drone fell near the main oil tank and pipeline network at a blending and packaging plant operated by the Zawiya Oil Refining Company, Libya’s state-owned oil company said in a statement.
No casualties or material damage were reported.
The NOC warned that repeated attacks posed a growing threat to oil facilities in the area and called for urgent intervention by relevant authorities, adding that continued attacks could force it to declare force majeure and completely halt operations at the Zawiya refinery.
The latest incident followed an attack on a gasoline storage tank at the Zawiya oil depot on Monday that sparked a major fire and prompted the NOC to declare a state of “maximum emergency.”
The tank, which contained an estimated 4.5 million litres of gasoline, later collapsed as emergency crews worked to contain the blaze and prevent the fire from spreading to nearby facilities.
According to data from NOC, Libya’s crude oil production averaged approximately 1.35 million barrels per day in July. Oil Prices Slide Below $80 as Markets Price in US-Iran Talks
