Brent and WTI crude edged higher Wednesday after fresh US-Iran military strikes threatened to further squeeze an already constrained oil supply. Both benchmarks swung sharply during the session, and a bigger-than-expected US inventory draw added to the upward pressure.
Brent crude futures rose 25 cents to $94.90 a barrel by 10:48 a.m. ET, while U.S. West Texas Intermediate crude futures were up 10 cents at $90.32. The two benchmarks swung between gains of as much as $2 a barrel and losses of $1 a barrel through the session, pushing both to their highest levels since July 24.
Strikes deepen a seven-month war
The U.S.-Iran war is now in its seventh month, and the recent attacks mark the biggest exchange of fire between Tehran and Washington since July. U.S. forces struck Iran's southern coast, and Iran fired on American bases across the region. The conflict, which began with joint U.S.-Israeli strikes on Iranian targets in late February, has effectively closed the Strait of Hormuz, a waterway that carried about a fifth of global oil and LNG consumed before the war started.
According to BOK Financial: "workaround crude oil supplies can still make it to the market eventually", said Dennis Kissler, the firm's senior vice president of trading. Nations worldwide have relied on their reserves, which have also dwindled.
Traffic through Hormuz stays thin
The Islamic Revolutionary Guard Corps said the U.S. attacks would further restrict traffic through the strait. U.S. Secretary of Energy Chris Wright said on Tuesday that 17 million barrels of oil transited the Strait of Hormuz on Monday, the largest volume since the war began.
However, four commodity vessels transited the strait on Tuesday, down from 10 a day earlier and below the 10-day average of around 13, preliminary Kpler shipping data showed. Two oil tankers hit sea mines and were disabled while attempting to transit the strait, Iran's Revolutionary Guards said Wednesday.
Iraq boosted its crude oil exports in August, with September shipments also set to climb, as wide profits and Iranian approval for its tankers to pass through the strait have encouraged buyers. Separately, OPEC+ is likely to keep its output policy unchanged for October at a meeting Sunday, as the group completes the unwinding of one layer of production cuts this month and turns to 2027 quota negotiations.
US inventories post a bigger draw
In the U.S., crude oil inventories fell by 4.5 million barrels last week, the Energy Information Administration said, compared with analysts' expectations in a Reuters poll for a 1.1 million-barrel draw. Russia also carried out a heavy missile and drone attack on energy infrastructure in Ukraine's southern Odesa region overnight, Ukrenergo said.
Source: Investing.com
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