Key Moments
- ICE Brent trades back above $110/bbl as fresh attacks in Saudi Arabia reinforce geopolitical risk.
- Kuwait continues to export as much crude as before the war while producing more than 2m b/d, but faces refined product shipping challenges.
- Recent EIA data show a 3.06m-barrel weekly drop in US crude inventories alongside a 300k-barrel decline in Strategic Petroleum Reserves.
Gulf Tensions Underpin Oil Price Risk Premium
ING analysts Warren Patterson and Ewa Manthey report that oil prices remain strongly supported, with ICE Brent trading back above $110/bbl following new attacks on Saudi Arabia. They note that, despite ongoing geopolitical tensions, crude flows from the Persian Gulf have so far remained resilient, helping to balance a market still pricing in a significant risk premium.
Persian Gulf Crude Flows Remain Resilient
“Despite the volatile environment, oil flows from the Persian Gulf are holding up. According to the CEO of Kuwait Petroleum Corp, Kuwait is exporting as much crude oil as before the war and producing more than 2m b/d. However, he admitted that the shipping of refined products is more of an issue.”
The analysts highlight that while Kuwait’s crude exports and production volumes have been maintained, logistical constraints are more acute for refined products, contributing to ongoing tightness and risk perception in downstream markets.
| Key Supply Indicators | Detail |
|---|---|
| Kuwait crude exports | As much as before the war |
| Kuwait crude production | More than 2m b/d |
| Refined product shipping | Described as “more of an issue” |
Policy Concerns and Uncertain Flow Sustainability
“While oil flows have remained elevated, President Trump has expressed concern that oil prices remain elevated due to supply risks. This leaves plenty of uncertainty over the sustainability of flows. The sizeable risk premium currently embedded in prices is unlikely to fade until clear signs of de-escalation emerge and reassure investors that regional supply will remain uninterrupted.”
ING’s commentary underscores that persistent geopolitical tensions and policy concerns continue to underpin a notable risk premium in crude prices, with market participants awaiting concrete signs of de-escalation before reassessing supply risk.
US Inventory Draws and Production Impact
“EIA inventory data shows US crude oil inventories fell by 3.06m barrels over the last week. There was an additional 300k-barrel fall in Strategic Petroleum Reserves. The data still reflects the impact of hurricane activity in the US Gulf of Mexico, with US oil production estimated to have fallen 410k b/d week-on-week.”
The combination of commercial stock draws, a decline in Strategic Petroleum Reserves, and weather-related disruptions to US Gulf of Mexico output adds to the supportive backdrop for prices already influenced by geopolitical risk.
| US Oil Market Metrics | Change |
|---|---|
| Crude oil inventories | -3.06m barrels (last week) |
| Strategic Petroleum Reserves | -300k barrels |
| US oil production | Estimated -410k b/d week-on-week |
Fresh Attacks in Saudi Arabia Reinforce Market Jitters
“Oil prices remain well bid, with ICE Brent back above $110/bbl this morning following additional deadly attacks on Saudi Arabia. Drones struck the Shaybah oilfield and Dammam’s international airport. An oil processing plant was the target of the attack.”
These attacks reinforce market concerns about the security of critical energy infrastructure in Saudi Arabia, further justifying the risk premium that ING analysts see embedded in current oil prices.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
