Crude Oil Prices: The global oil market may experience increased volatility. Oil-producing nations have faced significant challenges due to the US-Iran conflict. The United Arab Emirates (UAE) has announced its departure from OPEC and OPEC+ effective May 1.
As the third-largest producer in OPEC, the UAE holds a 12 percent share of the supply. In the meantime, Brent crude futures for June have risen by 52 cents, or 0.47%, reaching $111.78 per barrel, marking the eighth consecutive day of increases. The June contract is set to expire on Thursday, while the more actively traded July contract has seen a 0.4% rise to $104.84.
US West Texas Intermediate (WTI) crude for June has increased by 57 cents, or 0.57%, to $100.50 a barrel, following a 3.7% gain in the previous session and rising in seven of the last eight days. Crude oil prices experienced a reversal on the Multi Commodity Exchange (MCX). On Wednesday morning, MCX crude oil prices dropped over 0.64% to Rs 9,426 per barrel.
Prices lost some of their gains after the United Arab Emirates, the fourth-largest producer in OPEC+, announced on Tuesday its intention to exit the group on May 1, which dealt a significant blow to the oil-exporting coalition and its de facto leader, Saudi Arabia.
“In normal circumstances, this would have been very detrimental to the oil market and would likely have triggered a major sell-off,” stated John Kilduff, a partner at Again Capital. He projected that the UAE might soon ramp up production by 1 million to 1.5 million barrels per day. He further noted, “However, with the Strait of Hormuz completely shut, there’s no place for that supply to go. Therefore, we might see oil prices gradually continue to rise.” A US official reported on Monday that President Donald Trump was dissatisfied with Iran’s new proposal to conclude the war. Iranian sources indicated that the proposal would not address the nuclear program until hostilities ceased and Gulf shipping disputes were settled.
Trump’s dissatisfaction with the proposal has resulted in a deadlock in the conflict, as Iran has halted shipping activities through the strait, which is responsible for about 20 percent of the global oil and liquefied natural gas supply. Meanwhile, the US persists with its blockade of Iranian ports.
“With peace negotiations at a standstill and no clear route to reopening the Strait of Hormuz, traders are expressing concerns about a prolonged disruption to this crucial global supply route,” stated George Lyons, an analyst at Rystad Energy. The last round of discussions between the US and Iran collapsed last week after in-person talks did not yield any results. Ship-tracking information indicated notable disruptions in the region, with six Iranian oil tankers compelled to turn back due to the US blockade, although some vessels are still navigating the area.
Shipping records revealed that a Panama-flagged tanker, the Idemitsu Maru, which was transporting 2 million barrels of Saudi oil, along with an LNG tanker operated by the Abu Dhabi National Oil Company (Adnoc) from the UAE, successfully crossed the strait on Tuesday. The Adnoc tanker marked the first loaded LNG vessel to pass through since the onset of the Iran war on February 28. Prior to the US-Israeli conflict with Iran, which commenced on February 28, between 125 and 140 ships traversed the strait each day.
