Oil Edges Up as US-Iran Strikes Deepen Supply Worries
Brent and WTI crude saw volatile trade as US-Iran strikes intensified, threatening already constrained global oil supplies.
Oil prices were marginally higher in volatile trading on Wednesday, as fresh military exchanges between the United States and Iran heightened concerns over global supply disruptions. The conflict, now in its seventh month, has effectively closed the Strait of Hormuz, a waterway that previously carried roughly a fifth of the world's oil and LNG.
Brent crude futures rose 25 cents to $94.90 a barrel, while US West Texas Intermediate (WTI) crude was up 10 cents at $90.32. Both benchmarks swung between gains of $2 and losses of $1 during the session, briefly touching their highest levels since late July.
The latest attacks represent the most significant exchange of fire between the two nations in weeks. US forces struck Iran's southern coast, while Tehran fired on American bases in the region. Iran's Revolutionary Guards said the US attacks would further restrict traffic through the strait, and reported that two oil tankers had hit sea mines and were disabled while attempting to transit.
Despite the escalation, US Energy Secretary Chris Wright claimed that 17 million barrels of oil transited the strait on Monday, the largest volume since the war began. However, preliminary shipping data showed only four commodity vessels crossed on Tuesday, down from ten a day earlier and below the ten-day average of around 13.
Traders noted that the market has absorbed the fact that alternative crude supplies can eventually reach buyers. "While the increase in conflicts will slow transit through the Strait of Hormuz in the near term, the market has absorbed the fact that workaround crude oil supplies can still make it to the market eventually," said Dennis Kissler, senior vice president of trading at BOK Financial.
Iraq boosted its oil exports in August, with September shipments also set to climb, as wide profit margins and Iranian approval for its tankers to pass through the strait encouraged buyers. OPEC+ is likely to keep its output policy unchanged for October at a meeting on Sunday, sources said.
Elsewhere, Russia launched a heavy missile and drone attack on energy infrastructure in Ukraine's Odesa region overnight, according to transmission system operator Ukrenergo. In the US, crude inventories fell by 4.5 million barrels last week, far exceeding analyst expectations of a 1.1 million-barrel draw.