Crude Slides as Traders Weigh Increased Middle East Flows

Crude slides as traders weigh increased Middle East flows

The WTI prompt-month contract fell $2.34 to $87.09/Bbl Tuesday morning (7:30 AM CT)
Middle East oil flows have recovered to roughly 80% of pre-conflict volumes, according to Shell CEO Wael Sawan
Vitol CEO Russell Hardy said roughly 12 MMBbl/d of crude passed through the Strait of Hormuz over the past seven to ten days
- An additional 2 MMBbl/d of refined products also moved through the waterway
Despite the recovery in flows, Hardy warned that the US-Iran war has depleted Western oil inventories, leaving fuel markets vulnerable to further tightness heading into winter
- The G7, in coordination with the IEA, plans to release 100 MMBbl of emergency crude and refined-product stocks over four months, though Hardy said the details remain “not fully transparent”
Geopolitical risks also remain elevated as fighting between Yemen’s Saudi-backed government and the Iran-backed Houthis intensifies, increasing the threat to Saudi energy infrastructure and regional shipping routes

Gas continues higher as production struggles continue

Natural gas is up 2.1c to $3.087/MMBtu (As of 07:30 AM CDT)

Production took a step back, down 2.8 Bcf/d this morning to 108.3 Bcf/d (Criterion)

The South Central, led by Haynesville, took a large step back, falling over 2 Bcf/d this morning
Haynesville production dropped to its second lowest level since Fern

There is a tropical disturbance forming in the gulf, currently just west of the Yucatán peninsula

Models are forecasting this to become a Category 3-4 hurricane heading North, so it is worth monitoring
Models currently have the storm missing most of the LNG Corridor, on a collision course with the Mississippi coastline