WTI Whipsaws as Hormuz Hopes Collide With Diesel Crunch

November WTI crude oil futures spent the week trading a possible reopening of the Strait of Hormuz against the risk that shipping conditions have not normalized. The contract fell to $88.67 Tuesday after reports that Iran could reopen the Strait within seven days, then recovered to $96.78 Thursday as the diplomatic story ran into the same problem it had all week: no agreement, no normal tanker traffic, and no proof the physical market is back to normal.

At 22:00 GMT Thursday, November, WTI crude oil futures were trading at $94.76, down $0.71 or 0.74% for the week. The market is off the week’s high, but it is also well above Tuesday’s low. That tells the story. Traders took premium out when Saudi barrels started moving, and Iran floated a deal. They put some of it back when it became clear that workaround routes are not the same as open shipping lanes.

Saudi and Iraqi Barrels Changed the Crude Trade

The week started with more crude getting through a market that had been priced for a bigger supply problem. Saudi Aramco increased shipments through Hormuz after attacks damaged its East-West Pipeline and interrupted some Red Sea loadings. Tanker tracking showed about 14 million barrels loaded on seven VLCCs inside the Gulf. Saudi flows through the Strait rose sharply from August levels.

The East-West Pipeline restart added another option. It was not a full return to normal capacity, but it gave Saudi Arabia a route to the Red Sea that did not require every…