PRISM Oil & Gas Index: Iranian Tanker Attacks Push Brent Back Above $100

Brent crude climbed back above $100 a barrel early Wednesday after Iran stepped up attacks on tankers in the Strait of Hormuz. As a result, the move puts the small- and micro-cap producers in the PRISM Oil & Gas Index back in focus ahead of the opening bell. Brent rose about 0.9% to roughly $101.50, and WTI gained about 0.6% to nearly $90. Meanwhile, the U.S. 10-year Treasury yield moved above 5.3% as traders weighed how higher energy costs could keep inflation, and rates, elevated.

Key Points

• Hormuz attacks are increasing. UK Maritime Trade Operations has reported nine tanker incidents so far in October, with at least one attack a day since October 2.
• Brent is back above $100, well above its pre-war level of roughly $72.
• The PRISM Oil & Gas Index closed Tuesday essentially flat (-0.02%) at $124.37, up 24.37% since its January 2024 inception.
• Gran Tierra Energy (GTE) won Azerbaijani parliamentary ratification of its onshore production sharing agreement.

Tanker Attacks Pressure a Fragile Recovery

The renewed attacks come just as Gulf oil flows had begun to rebound. Excluding Iran, Gulf exports reached about 81% of pre-war levels in September. Middle East crude exports even topped pre-war levels on 14 days that month. However, at least seven tanker incidents in a single week have raised doubts about whether that recovery can last. The MT Kazimah III caught fire after it was struck on October 1. Then, on October 4, the MT Lipsi took damage to its engine room.

Still, several factors are limiting the price spike. Saudi Arabia’s East-West pipeline has restored capacity to 5.8 million barrels per day, which lets roughly 40% of regional exports bypass Hormuz. In addition, the G7 agreed to release 100 million barrels from emergency reserves, and U.S. crude inventories fell by 2.1 million barrels last week.

Index Leaders Heading Into the Session

Mexco Energy Corporation (NYSE American: $MXC) led the index on Tuesday, jumping 9.04% to $10.61. Volume reached 19,000 shares, compared with an average of about 11,000.

Comstock Resources, Inc. (NYSE: $CRK) gained 4.52% to $13.65. It remains one of the index’s strongest long-term performers, up 52.68% since inception.

Kosmos Energy Ltd. (NYSE: $KOS) rose 3.17% to $2.60 on volume of 16.3 million shares, above its 15.3 million average.

Gran Tierra Secures Azerbaijan Ratification

Gran Tierra Energy Inc. (NYSE American: $GTE) announced that Azerbaijan’s parliament ratified its exploration, development and production sharing agreement for an onshore block. Gran Tierra operates the project and holds a 65% working interest. The company also completed an airborne gravity survey covering about 4,815 square kilometers. It will combine that data with existing seismic and well data to choose future drilling locations. Furthermore, the milestone supports Gran Tierra’s plan to refocus on Canada and Azerbaijan after it announced the sale of its Colombian and Ecuadorian assets. GTE closed Tuesday at $10.46, down 0.19%.

Tanker Exposure in Focus

Imperial Petroleum Inc. (NASDAQ: $IMPP) is the index’s shipping name, so Hormuz developments could weigh heavily on it. IMPP slipped 1.33% to $5.20 on Tuesday. On the other end, Greenland Energy Company (NASDAQ: $GLND) was the index’s biggest decliner, falling 19.14% to $3.00.

The Bottom Line

Oil is once again trading on geopolitics. If tanker attacks keep rising, upstream producers like Mexco, Comstock and Kosmos could see more buying. On the other hand, the Saudi pipeline bypass and emergency reserve releases make a sustained supply shock less likely. PRISM MarketView will track how the Oil & Gas Index responds once trading opens.