CDN NEWS | 
US NEWS 
July 26, 2018, by Sharon Cho and Alex Longley
(Bloomberg)
Oil advanced in London after an attack on Saudi Arabian tankers heightened concern over disruption to supplies.
Brent futures rose as much as 1.2 percent after adding 0.7 percent Wednesday. Two vessels were attacked by Yemeni Houthi militia, leading Saudi Arabia to suspend oil shipments via the Bab el-Mandeb Strait. Meanwhile, U.S. crude inventories dropped to the lowest since 2015, and an Indian refiner said it’s unlikely to buy more Iranian oil unless it secures a sanctions waiver.
Oil has fluctuated this month as traders weigh OPEC’s pledge to pump more crude against a potential slump in Iranian exports following President Donald Trump’s renewal of sanctions. Thursday’s gain highlights the growing political-risk premium in the crude market, even though Brent’s current contango price structure suggests there’s still ample supply.
The Saudi halt “tells us that the geopolitical threat to the energy space is never far away,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S. “Even though we’ve seen a return to contango, it’s not adding additional pressure to the price at this stage, as most people expect it to be a temporary thing.”
Brent for September added as much as 90 cents on the London-based ICE Futures Europe exchange, and traded up 17 cents at $74.10 a barrel as of 1:36 p.m. local time. The Brent September-October timespread closed Wednesday at the weakest level for a front-month spread since April 2017, excluding expiry days. Options on the September Brent contract expire Thursday.
West Texas Intermediate crude for September delivery rose as much as 44 cents to $69.74 a barrel on the New York Mercantile Exchange, before erasing gains to trade little changed. Brent traded at a $4.91 premium to WTI.
Tankers Attacked
The Bab el-Mandeb Strait is one of the world’s key shipping lanes for crude and other petroleum products. A full closure would force tankers from Saudi Arabia, Kuwait, Iraq and the United Arab Emirates to sail around the southern tip of Africa, adding to transit time and cost, according to the U.S. Energy Information Administration.
The EIA also published its U.S. stockpile data, which showed inventories dropped by 6.15 million barrels last week to 404.9 million barrels, while supplies at the key storage hub of Cushing, Oklahoma, shrank for a 10th week. U.S. crude exports surged by the most on record.
Other oil-market news:
Hindustan Petroleum Corp. is unlikely to buy any more Iranian oil unless India gets a sanctions waiver from the U.S., according to an official at the state-owned refiner. Thursday saw a slew of European oil-company earnings, with Royal Dutch Shell Plc reporting lower-than-expected profit, while Equinor ASA and Total SA almost matched or exceeded estimates. In the U.S., ConocoPhillips beat quarterly profit estimates and said it’s boosting its 2018 drilling budget as oil prices surge. Marathon Petroleum Corp. and Valero Energy Corp. also earned more than analysts expected.
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