Markets
Oil Reopened Lower After the Weekend's Claims. Murban Hit $118
Brent fell 1.8% to $114.60 when futures reopened, as none of the Houthis' weekend claims of hits on Saudi oil sites was confirmed. Murban, the UAE grade loaded outside the Strait of Hormuz, did the opposite: it rose about 3% to above $118, roughly $3.40 over Brent. WTI slipped 2.1% to $101.13.
The opening print answered Saturday's question with a shrug. By 02:32 GMT on Monday, December Brent was down $2.12, or 1.82%, at $114.60 a barrel and WTI down $2.14, or 2.07%, at $101.13, according to Reuters figures relayed by Shafaqna; by mid-afternoon in Sydney, ABC's markets blog had Brent 1.9% lower at $114.47 and WTI 2.2% lower at $100.96. Both had settled nearly $3 higher on Friday, and Brent had gained 6% on the week. Gulf News wrote that the trigger for Monday's move was not immediately clear, and the explanation most outlets offered was the simplest: profit-taking after a rally, with nothing new to justify more.
Nothing new is the important part. The Houthis said on Saturday that they had hit an Aramco facility in Yanbu, the Rabigh refinery, pumping stations on the East-West Pipeline and airports in Riyadh and Dammam. The Saudi-led coalition said it intercepted two ballistic missiles aimed at Yanbu and Taif on Saturday and more drones and missiles aimed at Riyadh, Khamis Mushait and the south on Sunday. By Monday morning no hit on oil infrastructure had been independently confirmed, Gulf News reported, and Saudi Arabia had not confirmed the claims. A market that had paid up on Friday for the possibility of damage gave some of that back when the damage did not appear.
One grade went the other way. Murban, the light crude Abu Dhabi loads at Fujairah on the Gulf of Oman, rose about 3.2% to above $118 a barrel, roughly $3.40 above Brent, after rising nearly 4% to $114.40 on Friday, when it had closed level with Brent. The logic is geographic. Since the summer, barrels that can reach buyers without crossing the Strait of Hormuz have commanded a premium, and the East-West Pipeline to Yanbu is Saudi Arabia's version of that route. When the bypass looks threatened, the barrels that already sit outside the strait become more valuable, which is why Murban traded above $127 in mid-September while Brent was just above $107.
That split is a useful way to read the weekend. The global benchmark eased because the worst case did not materialise; the price of guaranteed access to the open sea rose because the threat to the alternative route did. US Central Command said on Sunday that its commander, Admiral Brad Cooper, had flown over the Strait of Hormuz and that US forces had helped partners export more than 1.5 billion barrels since the summer, a reminder of how much of this year's supply depends on protection. Natural gas, with less exposure to the Gulf, fell about 3.9%.
The calendar adds a mechanical complication this week. The December Brent contract expires on Friday, October 30, and January, which settled about $5 lower on Friday at $111.70, then becomes the front month, so charts of the benchmark will show a step down that no one traded. Between now and then, the market has the Fed on Wednesday and Exxon Mobil and Chevron's results on Friday. Monday's opening said only that claims are no longer enough to lift the price on their own.