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Oil switched between gains and losses as a report of an attack on an oil tanker offered another injection of political risk into the market, after a turbulent 24 hours. Brent oil added as much as 1% in London before trading little changed. An oil tanker linked to an Israeli billionaire was hit by a projectile about 150 miles off the coast of Oman, according to a statement from its owner.
The news was the latest sign of geopolitical risk in the oil market, coming the day after a rocket hit a Polish village near the Ukrainian border. The incident was unlikely to have been an intentional attack, the country’s President said. A section of the Druzhba oil pipeline, Europe’s largest crude oil conduit, also remains offline after disruption to its power supply, though it is expected to restart soon.
The flurry of geopolitical headlines have spurred a renewed bout of volatility in an oil market that has largely been stuck between $90 and $100 in recent weeks. Traders are waiting to see the impact of sanctions on Russian oil that kick in early next month, while there are also concerns about the outlook for global growth on demand.
“Geopolitical risk premia only hold if they trigger supply disruptions,” said Giovanni Staunovo, a commodity analyst at UBS Group AG.
Prices:
- Brent for January settlement added 27 cents to $94.13 a barrel at 12:30 p.m. in London
- WTI for December delivery edged lower at $86.85 a barrel
There has also been disruption in supply in North America. North Dakota’s oil production has slipped amid severe winter weather, while the Keystone oil pipeline that runs from Canada to the US Gulf will see reduced volumes in November.
Still there have been signs of a softening market in recent days. Timespreads that gauge market health have been getting steadily weaker, while the pace of West African oil sales was said to be slow, according to traders.
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