ING analysts Warren Patterson and Ewa Manthey note that ICE Brent is still finding support around the $100/bbl level as geopolitical risks in the Persian Gulf outweigh an improving supply backdrop. They highlight recent attacks on Saudi infrastructure, adjustments in Kuwait and Saudi output and pricing, and lingering vulnerability in European natural gas storage ahead of winter.

Brent supported by Gulf tensions

“ICE Brent continues to find support around the $100/bbl level, with geopolitical risks outweighing an improvement in the supply picture.”

“While there are growing signs of a recovery in oil flows from the Persian Gulf, the market remains nervous about potential supply disruptions from the region. This is keeping prices well-supported for now. This nervousness is likely to persist until there are signs of progress in a deal between the US and Iran.”

“Reports yesterday said Saudi Arabia’s East-West pipeline was targeted again. It only recently returned to operation following an earlier attack. Though the latest attack doesn’t appear to have disrupted flows through the pipeline, it’s a reminder that flows remain at risk.”

“Oil producers in the Persian Gulf continue to adapt to the region’s situation. Kuwait said that it is producing at 75% of pre-war levels, while the Saudis also cut the official selling price of their Arab Light into Asia for November loadings, a sign of an improving supply picture.”

“The European gas market remains vulnerable, despite signs of a more recent pick-up in LNG flows from the Persian Gulf. EU gas storage is just shy of 73% full. This is down from 83% at the same stage last year, and below the 5-year average of 88%.”