Saudi Calls Emergency Summits on Drone Strikes

An early afternoon rally yesterday helped to significantly narrow losses, rising from a daily low of $56.88 to a closing price of $58.81. Today, the late EIA report is sending prices lower once again. WTI crude is currently trading at $57.45, down $1.36.

Fuel prices are also dipping lower after an afternoon rally yesterday. Diesel prices are currently trading at $.9304, a loss of 3.7 cents. Gasoline prices are trading at $1.8917, a 5.4 cent decline.

The EIA’s report is sending markets lower, with a crude draw far smaller than predicted by the API. Although finally moving away from steady builds, markets had been expecting a more decisive turn lower to start the summer withdrawal pattern. Refinery utilization did come back in a big way this week, up 1.3% points to 91.2%. Strong builds of Gulf Coast gasoline also kept inventories up for the week, while gasoline demand was some 300 kbpd below the same week last year.

Saudi Calls for Emergency Summits

In international news, after drone strikes on Saudi oil stations a couple weeks back, the Saudis are hosting numerous summits in Mecca to discuss a response to the attacks, which have been attributed to Iranian-backed forces. The three summits being hosted include:

1. The Organization of Islamic Cooperation, the second largest inter-governmental organization behind the UN. The OIC is primarily focused on social/political activities within the Muslim world.
2. The Gulf Cooperation Council, made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. The GCC is primarily an economic union, with some joint defense initiatives.
3. The Arab League, a regional league made up of 22 Middle East and North African countries. The Arab League has historically been a political forum for communication, though in recent years it has taken on a greater focus on joint military coordination and regional stability.

While the OIC meeting had been planned, the GCC and Arab League emergency summits were called two weeks ago by the Saudis, a strong signal that Riyadh is taking the oil station attacks very seriously. Additionally, they invited Qatar to the summits, leading to the first Qatari jet landing in Saudi Arabia since 2017. Many expect Qatar to play a mediating role in the region, given their relatively positive ties with Iran. Altogether, 57 heads of state are expected to attend these summits this week.

Iran denies playing any role in the attacks, but US National Security Advisor John Bolton has indicated American beliefs to the contrary. While the Summits likely will not bring any particular action towards Iran, it gives an opportunity for countries to discuss the “aggression and consequences” and develop a united front against further escalation.