Oil prices ticked down Monday morning as additions of oil rigs in the US appear to outweigh the rising tensions in the Middle East. Brent crude had lost 0.08% by 08.51 AM GMT, to trade at $63.47/bbl, while at the same time WTI was down 0.07% to $56.7/bbl.
Tensions in the Middle East have increased following the explosion of a pipeline transporting crude oil into Bahrain. Local authorities claim that the explosion was an act of terrorism and have pointed their finger towards Iran, suggesting that Iranian backed militias were responsible for the sabotage. The pipeline carries 200-230,000 bpd of crude oil from Saudi Arabia to Bahrain and is the main supply route for the Sitrah refinery, owned by BAPCO. The pipeline blow-out mounts friction between Saudi Arabia and Iran, following the downing of a projectile missile targeting the Riyadh airport and the recent developments in Lebanon, where Prime Minister Saad Hariri recently resigned citing safety concerns from Iran-backed Hezbollah.
Bahrain’s crude trade is heavily reliant on Saudi Arabia, as imports come exclusively from the Kingdom, on top of limited production coming from a shared oil field. Bahrain is the only net crude oil importer in the Arab Gulf, as exports of crude oil, which only began a little more than a year ago are limited to around 160,000 bpd, typically exported through Ras Tanura in Saudi Arabia.
In the US oil rigs rose by 9 units to 738 active units, as crude prices have soared to above 2-year highs. Most additions were seen in Oklahoma, where the active fleet increased by 6 units, following a drop of 8 units the week prior. Rigs in Texas declined by 2 units following two weeks of additions.
The Oil Research Team
Supply Chain & Commodities Research