Oil prices continued to rise on 18 May as momentum towards ending the Iran conflict appeared to falter after an attack on a nuclear facility in the United Arab Emirates (UAE).
This increase also came ahead of expected meetings in which US President Donald Trump will weigh military options involving Iran.
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By 08:08 GMT, Brent crude futures had increased by $0.57, or 0.52%, reaching $109.83 a barrel (bbl). Earlier, they had risen to $112/bbl, the highest level since 5 May, reported Reuters.
Meanwhile, US West Texas Intermediate (WTI) crude reached $106.21/bbl, an increase of $0.79, or 0.75%, after climbing to $108.70/bbl, its highest level since 30 April. The June contract is set to expire on Tuesday.
The recent uptick follows last week’s increase of more than 7% in oil prices as prospects for resolving tensions in the Strait of Hormuz diminished.
Talks between Donald Trump and Chinese President Xi Jinping, held last week, concluded with no sign that China, the world’s largest oil buyer, would step in to help ease tensions sparked by US-Israeli strikes on Iran.
Meanwhile, drone strikes targeting the UAE and Saudi Arabia, along with increasingly sharp statements from both Washington and Tehran, fuelled worries that the situation could escalate further.
Emirati authorities said they were working to determine where the attack on the Barakah nuclear facility originated, stressing that the UAE reserved the right to respond to what it described as “terrorist” acts.
Saudi Arabia, after stopping three drones that crossed into its airspace from Iraq, said it would take whatever operational steps are required to counter any breach of its sovereignty and security.
Simultaneously, the Trump administration chose not to extend a sanctions waiver that had permitted countries, including India, to purchase Russian seaborne oil, a move that could lend support to oil prices.
Meanwhile, Iraq revealed that it exported ten million barrels of oil through the Strait of Hormuz in April. This is a decrease from around 93 million barrels per month before the ongoing war, according to Iraq’s new oil minister, Basim Mohammed, reported Reuters.
The prevailing conflict around the strait has hindered exports from several countries including Saudi Arabia and Kuwait, leading to notable price increases.
Mohammed noted that exports are contingent on tanker arrivals, which have been affected by insurance issues.
Iraq continues to produce 1.4 million barrels per day (mbbl/d) and has resumed exports via the Kirkuk–Ceyhan pipeline after an agreement with the Kurdistan Regional Government.
The country is negotiating with US companies such as Chevron, ExxonMobil and Halliburton to develop oil and gas projects.
Mohammed urged these companies to expedite contract signings for potential revenue benefits.
Furthermore, Iraq aims to work with Opec to increase its production and export capacity, targeting a production level of 5mbbl/d.
Iraqi officials reaffirmed their commitment to Opec and Opec+, emphasising the importance of a stable organisation for maintaining steady oil prices following the UAE’s decision to exit the group.
