Brent and U.S. crude prices advanced for a fourth straight session Thursday, reaching their highest levels in six weeks as renewed American strikes on Iran, Israeli threats against Tehran and reduced shipping through the Strait of Hormuz intensified concerns over Middle East oil supplies.
By yourNEWS Media Newsroom
Oil prices pushed to fresh six-week highs Thursday as escalating military tensions involving the United States, Iran and Israel renewed fears that the conflict could further disrupt crude supplies moving through the Middle East.
Brent crude futures rose $1.66, or 1.7%, to $97.29 a barrel by 1200 GMT, reversing earlier losses.
U.S. West Texas Intermediate crude climbed $2.03, or 2.2%, to $93.04 a barrel.
Both benchmarks were on pace for a fourth consecutive day of gains and had reached six-week highs earlier in the trading session.
The latest move came after a renewed round of U.S. strikes on Iran and fresh warnings from Israel that additional Iranian attacks could trigger retaliation against military and civilian infrastructure, including energy facilities.
Iran’s health minister said 18 people were killed and 108 wounded in U.S. strikes Tuesday night across the country.
The Iranian Red Crescent separately said four people were killed and 67 wounded when a wedding ceremony near the Strait of Hormuz coast was struck.
Three Iranian Army pilots were also killed in the U.S. attacks, according to the semi-official Tasnim news agency.
The latest exchange represented the most substantial fighting between the United States and Iran since July.
The war has now entered its seventh month, keeping energy traders focused on the risk that prolonged hostilities could interfere with oil production, exports or transportation through the region.
Israeli Defence Minister Israel Katz added to those concerns by renewing his warning that Israel would “cripple” Iran’s military and civilian infrastructure, including energy installations, if Tehran launched attacks against Israel.
Saxo Bank analyst Ole Hansen said Katz’s remarks contributed to Thursday’s rise in oil prices.
The Strait of Hormuz remains one of the central points of concern for traders.
Preliminary shipping figures released Thursday showed that only six commodity vessels passed through the strait Wednesday.
That was down from 11 vessels Tuesday and substantially below the recent 10-day average of approximately 13 ships.
Reduced traffic through the waterway has heightened attention on the potential for disruptions to crude exports and other energy shipments moving into and out of the Persian Gulf.
Iran has also expanded the list of vessels it considers non-compliant.
Ships placed on that list could face fines, confiscation or detention if they attempt to transit the strait.
The geopolitical pressure is occurring against an already relatively tight oil-market backdrop.
“The oil market remains tight, with oil inventories still declining globally translating in higher prices. Some support might have also come from ongoing tensions in the Middle East,” UBS energy analyst Giovanni Staunovo said.
Falling global inventories can amplify the market impact of geopolitical disruptions because buyers have fewer readily available supplies to absorb unexpected losses.
At the same time, Iraq has increased exports significantly.
Two Iraqi energy officials said Wednesday that the country exported approximately 2.34 million barrels per day in August, up from around 1.35 million barrels per day in July.
Exports are expected to rise again in September.
Heavy discounts on Iraqi crude and Iranian approvals allowing Iraqi tankers to pass through the Strait of Hormuz have encouraged additional buying, according to the officials.
The increase in Iraqi shipments provides some additional supply to the market, but traders remain focused on whether the broader confrontation could threaten the region’s export infrastructure or further limit shipping through Hormuz.
The combination of reduced vessel traffic, Iranian enforcement measures and warnings that energy infrastructure itself could become a military target has kept a substantial geopolitical risk premium embedded in crude prices.
Oil markets are also contending with changing expectations for U.S. monetary policy.
In broader financial markets, traders have increased bets that the Federal Reserve could raise interest rates this month.
Higher interest rates can weigh on economic activity and ultimately reduce energy demand, but those concerns were overshadowed Thursday by immediate supply risks stemming from the Middle East.
For now, the market’s direction is being driven largely by the widening conflict and uncertainty surrounding Hormuz.
With Brent approaching $100 a barrel and WTI above $93, traders are increasingly pricing in the possibility that further military escalation could tighten supplies at the same time global inventories are already declining.
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