Uche Cecil Izuora
Analysts have warned that global inventory drawdowns and sustained shipping risks in the Middle East will aggravate prices of crude oil..
Crude oil prices are poised for further increases and the trending trajectory is higher, as global inventory drawdowns have accelerated and China is back to buying significantly higher crude oil volumes than in the spring, Energy Aspects founder and market intelligence director, Amrita Sen, told CNBC on Friday.
The intensified shipping risks in the Middle East with tanker attacks in the Strait of Hormuz and the Houthi threat in the Red Sea are hampering crude oil supply to Asian refiners. If Hormuz cancellations and delays persist, the only option for Asian refiners is to reduce runs, Sen said.
Following an uptick in Strait of Hormuz oil flows in August, shippers are now cautious again amid the re-escalation of hostilities, the oil market expert told CNBC.
The oil market has reached the “inflection point” and is heading for an “upward spiral” between crude and products, Sen noted.
Earlier this week, Sen told Bloomberg in an interview that China is estimated to import about 10 million barrels per day (bpd) of crude this month. The expected volume in September would be about 3 million bpd higher than in June, when China’s crude oil imports slumped to below 7 million bpd to a decade-low.
The return of China to crude buying and the accelerating inventory drawdowns are also pushing crude oil prices higher, apart from the headlines and U.S. and Iran rhetoric.
In the past two weeks alone, a total of 120 million barrels of oil were drawn down from inventories globally, Sen told Bloomberg.
All these factors are driving crude oil prices toward a “significant leg higher,” the market expert said on Wednesday, the day on which oil prices jumped above $100 per barrel for the first time since July.
Oil prices were on track early on Friday to end a trading week above the $100 a barrel mark for the first time since May