Escalating conflict supports crude prices
Oil prices remained close to six-week highs on Wednesday as markets assessed the intensifying conflict between the United States and Iran, alongside growing concerns that disruptions to Middle East shipping could threaten global crude supplies.
As of 04:12 ET (08:12 GMT), Brent crude futures for September delivery, the international benchmark, were up 3.4% at $94.13 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 3.7% to $87.42 per barrel.
Both benchmarks were on course for a fourth straight day of gains and were trading at their highest levels since June 11. Oil prices have advanced in six of the past seven trading sessions.
Military action and shipping risks remain in focus
U.S. officials said military forces carried out strikes against Iranian targets for an 11th consecutive night early Wednesday, targeting missile and drone launch sites, command-and-control facilities, air defense systems and other strategic infrastructure. The latest operations suggested Washington is stepping up pressure on Tehran even as diplomatic efforts continue.
President Donald Trump cast doubt on the prospects for negotiations on Tuesday, saying the United States had “no interest in meeting” with Iran. Adding to market concerns, U.S. Secretary of State Marco Rubio said on Wednesday that Washington remained committed to diplomacy while accusing Tehran of violating an agreement governing shipping through the Strait of Hormuz.
Iran, meanwhile, continued retaliatory attacks against U.S. military positions across the region, including Bahrain, Kuwait and Jordan.
Markets are also closely monitoring Yemen’s Iran-backed Houthi movement after it threatened a naval blockade targeting Saudi-linked shipping in the Red Sea. The warning has already prompted some oil tankers to change course, increasing concerns over exports from one of the world’s largest crude-producing nations.
“This would force tankers to enter and exit the Red Sea via the Suez Canal, adding significant time and expense to voyages to Asia,” ING analysts said in a note.
The latest threat comes as shipping through the Strait of Hormuz has already faced disruption due to ongoing hostilities, raising further concerns over global energy flows.
Supply disruptions extend beyond the Middle East
Fresh interruptions to Kazakhstan’s crude exports through the Black Sea added another layer of uncertainty after the Caspian Pipeline Consortium (CPC) suspended oil loadings following repeated attacks on tankers at its Russian export terminal.
“Factoring in the renewed disruptions from the Persian Gulf, risks to Saudi crude exports from the Red Sea, and developments in the Black Sea, one may argue that Brent at just over $91 a barrel is undervalued. Particularly if these disruptions persist into August,” the ING analysts added.
Separately, the American Petroleum Institute reported Tuesday that U.S. crude inventories increased by 2.603 million barrels last week, surprising analysts who had expected a draw of 1.5 million barrels. It marked the first weekly inventory build in two weeks.
Investors will now look ahead to official U.S. stockpile figures from the Energy Information Administration, due later on Wednesday.