Oil Retreats as Shipping Relief Hopes Offset Gulf Risks

Key Takeaways:

*Shipping attacks sustain oil’s risk premium: Threats around Hormuz raise freight, insurance and delivery risks, while the Aramco building attack has not established a lasting production loss.

*Oil reversed Wednesday’s gains: Brent eased from $106.06 to $104.67, while WTI fell from $95.09 to $94.07 in early Thursday trading.

*Possible sanctions relief weighed on prices: Washington is considering allowing certain sanctioned vessels to carry permitted oil, potentially easing tanker shortages and freight costs.

Market Summary:

Oil remains supported by threats to Middle Eastern shipping, although Thursday’s reversal shows that the market is also pricing potential relief in transport costs. Brent settled Wednesday at $106.06 a barrel and WTI at $95.09, with WTI reaching a three-week high following the Houthi attack on a Saudi Aramco administrative building in Dhahran and further attacks around the Strait of Hormuz. The building attack caused a limited fire; the reporting did not establish a lasting production loss. The more direct concern is maritime security: reports of a container ship and a dry bulk carrier sinking after separate attacks increased the risk of shipment delays, higher insurance costs and restricted tanker availability. 

Prices subsequently fell as Washington considered allowing previously sanctioned vessels to transport legally permitted oil, potentially expanding tanker availability and reducing freight costs. By 0116 GMT Thursday, Brent had declined to $104.67 and WTI to $94.07. However, the proposal remained under consideration, and Britain simultaneously called for tighter restrictions on shipping services supporting Russia’s shadow fleet. These differing policy positions leave the extent of any freight relief uncertain. Recovering Russian production and Middle Eastern exports also restrained prices, demonstrating that escalating attacks have not prevented all supply from reaching international buyers. 

Inventory developments nevertheless point to continuing physical strain. The API estimated an 11.1-million-barrel US crude draw for the week ended October 9, substantially exceeding expectations, although prices showed little sustained response ahead of official EIA confirmation. Globally, the IEA reported a 113-million-barrel decline in on-land inventories during September, largely offset by increasing oil held on water. Refinery processing is also expected to reach a seasonal low of 81.3 million barrels a day in October, while Middle Eastern refined-product exports remain far below pre-war levels. Consequently, recovering crude shipments do not automatically translate into sufficient diesel availability, particularly when freight costs squeeze refinery margins. 

Demand weakness provides a counterweight to these supply concerns. The IEA forecasts global oil consumption declining by 2.6 million barrels a day in 2026, reflecting expensive fuel, restricted availability and a deteriorating economic outlook. Persistent inflation could also prompt further monetary tightening, restraining activity and oil consumption. The near-term outlook therefore depends on whether recovering supply and lower shipping costs can outweigh renewed disruption risks. The official US inventory report, concrete decisions on vessel sanctions, emergency-stock delivery schedules and further developments around Hormuz are the immediate catalysts; reserve announcements matter most when they translate into additional fuel reaching buyers.

Technical Analysis

Crude Oil, H4:

Crude oil is showing a short-term bullish recovery rebounding from the recent lows around 86.75–88.20 and climbing toward the 94.05 resistance level. However, the latest candles show a rejection near this area, with price pulling back toward 93.70. This suggests that buyers have regained some control, but selling pressure is emerging as price approaches a key resistance zone.

Momentum indicators remain mildly bullish, although they suggest that buying pressure is beginning to weaken. The RSI is around 53, remaining above the neutral 50 level but below its moving average indicating that bullish momentum has softened following the recent advance. Meanwhile, the MACD remains in a bullish configuration, with the MACD line slightly above the signal line and the histogram still positive. However, the narrowing histogram indicates that upward momentum is losing strength, increasing the possibility of short-term consolidation or profit-taking.Overall, the near-term outlook remains cautiously bullish.

 Resistance Levels: 96.25, 98.55

Support Levels: 94.05, 91.80