Oil climbs as Middle East shipping attacks revive supply worries

Oil prices extended their gains on Wednesday morning, driven by renewed concerns over Middle East supply disruptions. The market was rattled by attacks on two ships and fading hopes of a peace deal between the United States and Iran.

Brent crude futures rose 72 cents, or 0.81%, to $89.63 a barrel, while US West Texas Intermediate (WTI) crude climbed 71 cents, or 0.85%, to $83.91. Both benchmarks had settled more than $1 higher on Tuesday, marking their strongest closes since July 31, after jumping about 5% on Monday.

The United States and Yemen's Iran-aligned Houthis reported separate attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday. Iran's top security official, Mohsen Rezaei, said the vital Strait of Hormuz would remain closed unless the US accepted Iran's conditions for ending the war, including the release of frozen Iranian assets.

Shipping data showed traffic through the Strait of Hormuz dropped to six vessels on Monday, compared with a 10-day average of about 11. Before the war, daily traffic through the waterway averaged 125 to 140 vessels.

On the supply front, market sources citing American Petroleum Institute data said US crude inventories rose sharply by about 9.1 million barrels in the week ended August 7, while gasoline and distillate stocks fell. The crude build far exceeded expectations and, if confirmed by the official EIA report due later on Wednesday, could ease market concerns about supply tightness.

Looking ahead, the EIA expected disruptions of about 600,000 barrels per day to Middle East crude oil supplies to persist through the end of 2027.