Oil prices fell Friday after surging the previous day, as traders weighed President Trump’s pledge not to attack Iran before the U.S. midterm elections against persistent shipping risks in the Persian Gulf and extensive offshore production shut-ins in the Gulf of Mexico.
The U.S. naval blockade of Iran remains in place, with roughly a dozen Navy ships in the region, The Wall Street Journal reported. Meanwhile, Hurricane Isaias has sharply increased disruptions to production in the Gulf of Mexico. The Treasury Department sanctioned 17 vessels it said were part of Iran’s remaining shadow fleet and had transported millions of barrels of Iranian crude, petroleum and petrochemical products to markets in South and East Asia. The Marine Minerals Administration said 1.28 million barrels a day, or 62.9% of current offshore oil output, had been shut in as of Thursday morning, up from about 511,600 barrels a day the day before. Personnel had been evacuated from 121 production platforms and five drilling rigs. Isaias had maximum sustained winds of 100 miles an hour Thursday evening as it moved toward the northern U.S.
Trump said Thursday that the U.S. wouldn’t attack Iran before the Nov. 3 midterm elections, citing what he called “productive discussions” with Tehran. Oil prices are likely to remain elevated in the short term despite the pullback as risks to Middle East shipping routes persist and U.S. offshore production remains disrupted, Hani Abuagla, senior market analyst at XTB MENA, said. Gulf Coast, according to the National Hurricane Center.
The U.S. also increased economic pressure on Tehran on Thursday.
Fewer than 500,000 barrels a day of refining capacity in Alabama and Mississippi was at risk of a direct hit, down from 2.5 million barrels a day expected earlier in the week, S&P Global Energy said. Gulf Coast diesel exports averaging 1.4 million barrels a day so far this week, down from 2.1 million barrels a day the previous week, S&P said. The threat to U.S. Gulf Coast refineries has narrowed despite the offshore shutdowns. Port closures and shipping delays could still disrupt refined-product exports, with U.S.
