Crude extends rally on Middle East conflict
Oil prices traded close to their highest levels in six weeks on Wednesday as investors reacted to the escalating confrontation between the United States and Iran and growing fears that regional shipping disruptions could tighten global crude supplies.
As of 04:12 ET (08:12 GMT), Brent crude futures for September delivery rose 3.4% to $94.13 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 3.7% to $87.42 per barrel.
Both benchmarks were heading for a fourth consecutive daily advance and were trading at their strongest levels since June 11. Crude has posted gains in six of the past seven sessions.
Shipping threats keep energy markets on edge
U.S. military officials said American forces launched strikes against Iranian military infrastructure for an 11th straight night early Wednesday, targeting missile and drone launch sites, command centers, air defense systems and other strategic assets. The latest action signaled a further escalation in Washington’s military campaign despite ongoing diplomatic efforts.
President Donald Trump dampened expectations for negotiations on Tuesday, saying the United States had “no interest in meeting” with Iran. Meanwhile, Secretary of State Marco Rubio said Washington remained committed to diplomacy but accused Tehran of violating an agreement covering shipping through the Strait of Hormuz.
Iran continued retaliatory attacks against U.S. military facilities across the region, including in Bahrain, Kuwait and Jordan.
Investors are also watching developments in the Red Sea after Yemen’s Iran-backed Houthi movement threatened a naval blockade affecting Saudi-linked shipping. The move has prompted some tankers to alter their routes, increasing concerns over exports from one of the world’s largest oil producers.
“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 warning comes as shipping through the Strait of Hormuz has already been disrupted by the ongoing conflict, reinforcing concerns over global oil flows.
Inventory data and export disruptions remain key
Additional pressure came from the Black Sea, where Kazakhstan’s crude exports were disrupted 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.
Meanwhile, the American Petroleum Institute reported that U.S. crude stockpiles increased by 2.603 million barrels last week, contrary to expectations for a 1.5 million-barrel draw. It was the first inventory build in two weeks.
Markets are now awaiting official U.S. inventory figures from the Energy Information Administration later on Wednesday.
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