Oil prices rose on Wednesday as fading hopes of a US-Iran peace deal and attacks on shipping in key Middle East waterways heightened concerns about potential disruptions to global crude supplies.
Brent crude futures gained 72 cents, or 0.81%, to $89.63 a barrel by 0053 GMT, while US West Texas Intermediate (WTI) crude rose 71 cents, or 0.85%, to $83.91 a barrel.
Both benchmarks settled more than $1 higher on Tuesday, reaching their highest closing levels since July 31. Oil prices had also jumped around 5% on Monday as expectations for a diplomatic breakthrough between Washington and Tehran weakened.
Attacks on shipping raise supply concerns
The United States and Yemen’s Iran-aligned Houthis reported separate attacks involving shipping in the Strait of Hormuz and Bab el-Mandeb Strait on Tuesday, adding to concerns over the security of vital oil transportation routes.
Iran’s top security official, Mohsen Rezaei, said Tuesday that the Strait of Hormuz would remain closed unless Washington accepted Tehran’s conditions for ending the conflict.
Iran’s demands reportedly include the release of frozen Iranian assets and an end to other conflicts across the region.
Shipping data showed that traffic through the Strait of Hormuz fell to just six vessels on Monday, compared with a 10-day average of around 11. Before the war, the waterway handled approximately 125 to 140 vessels per day.
The Strait of Hormuz is one of the world’s most important energy corridors, making prolonged disruption a major concern for global oil markets.
US crude inventories rise sharply
Meanwhile, fresh industry data indicated that US crude inventories increased significantly last week, potentially limiting further price gains.
Market sources citing American Petroleum Institute data said US crude stocks rose by around 9.1 million barrels in the week ending August 7.
Gasoline inventories reportedly declined by 1.5 million barrels, while distillate stocks fell by around 596,000 barrels.
Crude Oil Holds Above $87 as US-Iran Deal Hopes Fade, Hormuz Reopening Remains Uncertain
The increase in crude inventories was significantly larger than analysts had expected. If confirmed by the US Energy Information Administration (EIA), the data could ease concerns about tight supplies.
“The crude build far exceeded expectations and, if confirmed by the EIA report later on Wednesday, could ease market concerns about supply tightness,” Haitong Futures said in a note.
The EIA was scheduled to release its official inventory figures at 10:30am ET (1430 GMT) on Wednesday.
Middle East supply disruptions could persist
Despite the increase in US inventories, concerns about longer-term supply remain.
The EIA expects disruptions of around 600,000 barrels per day to Middle East crude oil supplies to continue through the end of 2027.
With diplomatic efforts between the US and Iran showing signs of strain and shipping activity through key waterways sharply reduced, traders are closely watching developments in the region for further signs of supply disruption.
