Oil Brent WTI: US inventories, UAE attack

Oil prices fell on Wednesday despite increasing attacks on the United Arab Emirates’ energy infrastructure, as rising US crude inventories helped offset rising geopolitical risk premiums.

International benchmark Brent prices fell 1.17% to $102.19 per barrel. US oil prices fell 1.81% to $94.56 per barrel as of 10:44 pm ET.

Market sources told Reuters, citing data from the American Petroleum Institute, that US crude stocks rose by 6.56 million barrels in the week ended March 13, more than the 380,000 extra barrels expected in a Reuters poll for the same period.

The price pullback came even as fresh strikes in the UAE raised fears of prolonged supply disruptions amid the Iran conflict. Recent incidents include a drone attack on the world’s largest ultra-sour gas facility, a fire in the Fujairah Oil Industry Zone and damage to a tanker near the Strait of Hormuz.

The UAE reopened its airspace on Tuesday after it was temporarily shut down by drone strikes. Meanwhile, operations at the Shah gas field have been suspended after a separate drone strike caused a fire, officials said, with no injuries reported.

Located approximately 110 miles southwest of Abu Dhabi, the Shah field is owned by the Abu Dhabi National Oil Co. and operated by Occidental Petroleum. It has a capacity of 1.28 billion standard cubic feet of gas per day and 4.2 million tons of sulfur annually.

Oil prices have come under some pressure since the US used bunker-busting bombs to destroy Iranian missile sites near the Strait of Hormuz, said Andy Lipow, president of Lipo Oil Associates.

“It gives some optimism that we’re getting closer to the day when tankers can safely restart the waterway,” he told CNBC.

Oil markets are likely to remain under pressure in the near term, Citi said. In its base scenario, disruptions to flows through the Strait of Hormuz over the next four to six weeks could remove 11 million to 16 million barrels a day from the market, pushing Brent crude to around $110 to $120 a barrel.

In a more extreme scenario, a prolonged outage or widespread attack on energy infrastructure could raise prices to an average of $130 in the second and third quarters, up from $150 Brent or $200 including refined products.