Oil prices moved higher again on Tuesday as continued uncertainty over the Strait of Hormuz kept supply concerns in focus, despite signs that some Gulf oil exports are beginning to recover.
Brent crude rose towards $107 a barrel, while West Texas Intermediate moved above $93 a barrel. The gains came as US-Iran discussions remained unresolved over the reopening of the Strait of Hormuz, maintaining a risk premium in crude markets.
The Strait remains central to the oil market because of the volume of crude and petroleum products that normally passes through the waterway. Disruption has forced some shipments to take longer and more expensive routes, contributing to tighter physical markets and higher freight costs.
There are signs that supply through alternative routes is improving. Saudi Arabia has resumed exports through its East-West pipeline following repairs, providing an additional route that bypasses the Strait. The recovery in exports has limited the rise in oil prices, although it has not removed concerns over the wider supply situation.
The oil market is also being supported by tighter near-term supply conditions. The structure of the futures market has moved further into backwardation, with near-term prices trading above later contracts, indicating that traders are placing greater value on immediate supplies.
Criterium Energy Ltd (TSXV:CEQ) is Canadian-based upstream energy company focused on the aggregation and sustainable development of assets in Southeast Asia that can deliver scalable growth and cash flow generation.
