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US Oil Update: Crude Holds Gains As Geopolitical, Supply Risks Stay in Focus

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Crude oil futures held steady in after-hours trading on Friday, but were on track for a weekly gain, as markets weighed renewed US-Iran hostilities against signs that crude supplies have so far weathered the latest escalation, while disruptions linked to the war in Ukraine added pressure to fuel markets.

Front-month West Texas Intermediate futures eased 0.12% to $91.40 per barrel, while Brent futures were up 0.67% to $96.18/bbl.

Soojin Kim, research analyst at MUFG, said oil headed for its strongest weekly gain since July as renewed US-Iran hostilities revived concerns over prolonged disruption to energy flows via the Strait of Hormuz.

On Friday, President Trump said that the US may hit Iran's Pickaxe Mountain very soon, without giving further details. Pickaxe Mountain, located near Iran's Natanz uranium enrichment facility, is a heavily fortified site that reportedly hosts two deeply buried tunnel complexes.

Iran's military said on Thursday it targeted US bases in Kuwait and the UAE, the state-run Tasnim News Agency reported. Kuwait said it responded to missile and drone threats, but the UAE hasn't announced any incidents.

The US's attacks on Iran earlier this week marked the fiercest clashes between Tehran and Washington since July. Israel also signaled preparedness to return to fighting if necessary, fueling concerns that the ongoing conflict could widen, according to media reports.

The US Treasury imposed new Iran-related sanctions on a small Turkish investment bank and two subsidiaries as the Trump administration ramps up economic pressure on Iran.

"Financial institutions continue to find out the hard way that we are serious about Operation Economic Outcast," US Treasury Secretary Scott Bessent said in a statement.

Bessent also said that since the US reinstated its blockade, no Iranian crude cargoes had successfully transited the Strait of Hormuz to China, leaving oil stranded aboard vessels inside the waterway and limiting Tehran's ability to replenish inventories.

Iran's ability to export crude has been increasingly constrained by the disruption, Treasury said, describing the combination of stranded oil, limited storage capacity and declining revenues as a growing pressure point for Tehran.

Meanwhile, Trump's envoys Steve Witkoff and Jared Kushner are set to travel to Moscow and Kyiv this weekend for talks aimed at ending the war, according to media reports. Ukrainian drone strikes on Russian energy infrastructure have squeezed global energy supplies in the recent past.

On the demand front, the price of diesel fuel hit a record Friday, as truckers in the US are paying an average of $5.85 per gallon nationwide, a 60% increase compared to the same period a year ago when diesel cost $3.71 per gallon.

ING strategists said that unless Persian Gulf and/or Russian diesel flows recover, the market is likely to tighten further as we head towards winter.

Going forward, market participants will be closely following OPEC+'s meeting on Sunday, where the producer group is expected to leave its oil output policy unchanged for October.

OPEC+ is likely to favor higher output, Bjarne Schieldrop, chief commodities analyst at SEB Research, said, adding that the prospect of further managed supply increases by the producer group adds to downside risks for oil prices in 2027/28.

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Oil & Energy

Shipping Traffic Below Pre-War Levels in Strait of Hormuz; Red Sea Shipping Holds Steady

Commercial vessel traffic through the Strait of Hormuz remained subdued on Thursday amid continued disruption at one of the world's key energy chokepoints.UK Maritime Trade Operations reported one confirmed attack during the 48-hour reporting period, involving a Saudi oil tanker.The UKMTO said that Iran's Islamic Revolutionary Guard Corps continued attacks, attempted attacks and harassment activity, including unmanned aerial vehicle overflights and targeted surveillance of merchant shipping.Traffic through the strait remained well below normal levels despite a modest recovery from recent lows.UKMTO said that independent tracking data showed single-digit numbers of vessels transiting in each direction, while US Naval Cooperation and Guidance for Shipping data indicated average traffic of more than 20 vessel transits per day over the previous week.The maritime security agency said that the contrasting estimates reflect differences in vessel-tracking and reporting methodologies but also point to continued disruption and caution among operators.Meanwhile, shipping activity through the southern Red Sea and Bab el-Mandeb was comparatively stable.The latest data from Windward show that eight vessels crossed the Strait of Hormuz on Sep. 3, down 9.4% from the normal daily average of 60. The data analytics platform said that 119 vessels are waiting to transit through the Strait of Hormuz.Meanwhile, the UKMTO said there were no confirmed attacks or disruptions in the southern Red Sea and Bab el-Mandeb during the period.Commercial traffic remained below normal levels, consistent with the pattern established after the July 20 Houthi declaration of a naval blockade against Saudi Arabia and earlier confirmed attacks on vessels in the region.Elsewhere, the Persian Gulf Strait Authority updated its list of non-compliant vessels, adding a further 11 ships to its blacklist on Thursday. The agency barred the vessels from transiting through the Hormuz for "non-compliance."PGSA, the authority set up by Iran to manage the strait, now prohibits 56 vessels from transiting the strategic waterway.

Oil & Energy

US Oil Update: Crude Settles Lower Despite Middle East Uncertainty

Crude futures settled lower in after-hours trading on Thursday after Iran's military attacked American bases in Kuwait and the UAE, while Saudi Arabia's smaller-than-expected hike to its flagship crude prices eased concerns about market tightness.Front-month West Texas Intermediate futures were up 0.7% to $91.63 per barrel, while Brent futures eased 0.04% to $95.68/bbl.Hostilities in the Middle East remain elevated on Thursday as Iran's military targeted US bases in Kuwait and the UAE. The Kuwaiti Army confirmed that it responded to missile and drone threats, but the UAE hasn't announced any incidents.On Thursday, President Trump shared an infographic on Truth Social implying that the volume of oil transiting through the Strait of Hormuz is nearly back to pre-war levels.Trump, without citing the source, said 20 million barrels of crude flowed through the strait daily before the Middle East conflict, and about 18 million barrels per day are flowing through now.Vice President J D Vance said that everything that could happen going forward is on the table, including "economic pressure, military pressure, diplomatic pressure and covert pressure."Speaking at the White House press briefing, Vance also said that the US does not plan to hold talks with Iran unless Tehran stops attacking commercial shipping in the Strait of Hormuz.Meanwhile, Israel has reportedly indicated that it was prepared to return to the fighting if necessary, fueling concerns that the ongoing conflict could widen.Defense Minister Israel Katz said that an Iranian attack on the Jewish state would free Israel from any existing restrictions in a response against the regime in Tehran, according to media reports.Soojin Kim, a research analyst at MUFG, said that neither the US nor Iran has shown a willingness to resume negotiations, and the US is extending its regional troop deployment, thereby elevating the risk of prolonged disruption.On the supply front, Saudi Arabia kept the price of its flagship crude unchanged for next month, signaling less market tightness than some investors had anticipated.Energy Secretary Chris Wright reportedly said on Wednesday that a record 17 million barrels of oil transited the Hormuz on Monday under US military protection.Kim said that despite persistent security risks, the US military reportedly escorted 40 vessels carrying 18 million barrels of oil through the Strait of Hormuz on Tuesday.Though crude prices have been restrained by barrels flowing out of the strait, fuel supplies have been tighter, with Ukrainian strikes on Russian refineries reportedly compounding the squeeze.RBC Capital Markets strategists said that the growing use of dark transits underscores how security concerns are reshaping energy flows through the Strait of Hormuz, even as shipping activity continues.Going forward, Kim said that sustained Hormuz export flows could limit further price gains, but renewed military escalation should keep a sizeable geopolitical risk premium embedded in crude prices.

Oil & Energy

Oil Flows Rise Through Hormuz as US Rules Out Iran Talks Until Shipping Attacks Stop, Vance Says

US efforts have kept energy markets supplied, with 15 million barrels crossing the Strait of Hormuz on Wednesday, Vice President J D Vance said Thursday while briefing members of the media."Last night, 15 million barrels came out of the Strait of Hormuz," Vance said, adding that US action had kept oil and gas moving despite continued Iranian attacks on commercial shipping.Vance said Iran's attacks have pushed US gas prices higher, but the impact on global energy markets has weakened as more ships resume passage through Hormuz.He added that Washington will not set a timeline for ending its military efforts, arguing that Iran's continued attacks require the US to protect commercial shipping and maintain global energy supplies.He noted that "... major combat operations are currently not ongoing and they haven't been ongoing in a very long time.""Our message to the Iranians is simple... you've got to stop shooting at commercial shipping," Vance said, calling an end to the attacks essential.Vance ruled out negotiations with Tehran while Iran attacks commercial vessels, saying, "... the president's been very clear: we're not talking to them, and we're not going to talk to them unless they stop shooting at commercial shipping."The vice president said Washington has multiple options to pressure Iran."...everything that could happen is on the table, economic pressure, military pressure, diplomatic pressure, covert pressure," Vance said, adding that the administration would not reveal its plans and limit the president's decision-making options.Vance said the US has seen cooperation from China and other countries, including Turkey, Azerbaijan, the UAE, Saudi Arabia and Qatar, in efforts to pressure Iran over attacks on shipping."So, we've certainly had a number of conversations with the Chinese, and frankly, I think the Chinese have been responsive to some of the requests that we've made," Vance said.He went on to say, "Again I'm not saying they're doing everything that we've asked them to do."Vance said the administration wants to deny Iran the resources needed to rebuild its nuclear program, while protecting commercial shipping and maintaining energy supplies remain central US objectives.The vice president said the US destroyed Iran's nuclear facilities during about six weeks of major combat operations and later made it harder for Tehran to rebuild its nuclear capabilities.Vance called the Venezuela operation "an amazing testament to what a smart foreign policy could look like," saying it created "effectively a new 65 billion barrel of oil reserve for the United States."