Oil prices rose about 1% on Wednesday after Iran's security chief ruled out any enriched nuclear material leaving the country. Attacks on ships in the Strait of Hormuz show little sign of easing.
Oil prices rose about 1% on Wednesday from the previous session's two-month lows. Iran's security chief said Tehran would not allow even a single particle of enriched nuclear material to leave the country.
However, Washington has said nuclear matters must be part of any initial negotiations with Tehran aimed at ending the US-Israeli war on Iran.
Brent and WTI recover from two-month lows
Brent futures were up $1.28, or 1.4%, to $92.77 a barrel at 0934 GMT. US WTI crude gained 76 cents, or 0.9%, to $86.80.
In the previous session, oil initially fell by more than $3 a barrel after US officials played down the need for further military strikes against Iran. Prices later pared some losses after an Iranian security official said no talks were taking place between the two sides.
Hormuz attacks keep supply risk in focus
According to UBS analyst Giovanni Staunovo: "Oil prices are being supported by fading hopes of an imminent de-escalation."
There is little sign of attacks in the Strait of Hormuz easing. Data from the Washington Institute for Near East Policy show 37 ships were attacked in October, the highest monthly total since the start of the war.
Sparta Commodities senior analyst June Goh said there has been an increase of vessel attacks in the Gulf shipping lanes amid uncertainty over the diplomacy talks. She added that the key driver for the market was whether Iran would engage with US demands to reach a diplomatic agreement.
On Tuesday, the United Kingdom Maritime Trade Operations agency said a tanker was struck northeast of Lima in Oman. Iran's Revolutionary Guards Navy said separately that two tankers caught fire after hitting naval mines in the strait.
LSEG Oil Research said in a November 10 note that even if a deal is struck, an increase in flows through the waterway would still depend on mine clearance, insurance costs and whether or not shipowners would even be willing to take the risk.
US stocks build as Russian refining drops
On the supply side, market sources said US crude stocks rose by 9 million barrels in the latest week, citing American Petroleum Institute data. Official data is due later on Wednesday.
Industry sources said Russian oil refining capacity has been reduced by about 30% since late October following renewed Ukrainian drone attacks. Russian and Ukrainian officials also met in Abu Dhabi on Tuesday for their first peace talks since February.
Source: Reuters via Investing.com
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