Oil slips as rising U.S. crude inventories offset attacks on UAE energy infrastructure

Core Insights - Oil prices decreased despite rising geopolitical tensions in the UAE, with Brent crude falling 1.17% to $102.19 per barrel and U.S. oil prices down 1.81% to $94.56 per barrel [1] Supply and Demand Dynamics - U.S. crude inventories increased by 6.56 million barrels for the week ending March 13, significantly higher than the expected rise of 380,000 barrels [2] - The price decline occurred amid fears of supply disruptions due to recent attacks in the UAE, including a drone strike on a major gas facility and damage to a tanker near the Strait of Hormuz [3] Geopolitical Factors - The UAE's airspace was reopened after a temporary shutdown due to drone strikes, while operations at the Shah gas field remain suspended following a separate attack [4] - The U.S. military actions against Iranian missile sites near the Strait of Hormuz have created some optimism for safer tanker transit in the region [5] Market Projections - Citi forecasts that oil markets may face continued pressure, with potential disruptions in the Strait of Hormuz possibly removing 11 million to 16 million barrels per day from the market, pushing Brent crude prices to $110 to $120 per barrel [6] - In a more severe scenario, prolonged outages or broader attacks could elevate prices to an average of $130 in the second and third quarters, with potential spikes reaching $150 to $200 for Brent crude and refined products [7]