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Oil prices rose on Tuesday on rising disruptions from the Iran-Israel conflict, although major oil and gas infrastructure and flows have so far been spared from any substantial impact.
Brent crude futures LCOc1 gained $1.56, or 2.1 per cent, to $74.79 a barrel by 1202 GMT. US West Texas Intermediate crude CLc1 was up $1.42, or nearly 2 per cent, at $73.19.
Both contracts rose more than 2 per cent earlier in the trading session but also notched declines before bouncing back in volatile trading.
While no visible interruption was noticed in oil flows, Iran partially suspended gas production at the South Pars gas field that it shares with Qatar, after an Israeli strike caused a fire there on Saturday.
Israel also hit the Shahran oil depot in Iran.
“The market is largely worried about disruption through (the Strait of) Hormuz but the risk of that is very low,” said Saxo Bank analyst Ole Hansen.
There is no appetite around closing the waterway since Iran would lose revenue and the US wants lower oil prices and wants to lower inflation, Hansen said.
Oil tanker accident in Hormuz
Two oil tankers collided and caught fire on Tuesday near the Strait of Hormuz, where electronic interference has surged, highlighting the risks to companies moving oil and fuel supplies in the region.
Despite the potential for disruptions, there are signs oil supplies remain ample amid expectations of lower demand.
In its monthly oil report released on Tuesday, the International Energy Agency revised its world oil demand estimate downwards by 20,000 bpd from last month’s forecast, and increased the supply estimate by 200,000 bpd to 1.8 million bpd.
Investors were also focused on central bank interest rate decisions, Tamas Varga, analyst at PVM Associates said in a note, with the US Federal Open Market Committee, which guides the Federal Reserve’s rate movements, set to meet later on Tuesday.
