Crude oil barrels
Oil prices hit a three-week high on Wednesday as uncertainty over shipping through the Strait of Hormuz and ongoing supply disruptions supported the market.
Brent crude futures climbed 54 cents, or 0.59%, to $91.56 by 1157 GMT, while U.S. West Texas Intermediate crude futures were up 59 cents, or 0.69%, to $85.53 a barrel.
Brent crude hit its highest level since July 30, and WTI reached its highest since July 31.
“Confidence in safe passage remains low, with shipping volumes still running well below normal levels. That persistent uncertainty continues to keep a geopolitical risk premium embedded in the oil price,” KCM chief market analyst Tim Waterer said.
U.S. President Donald Trump said on Tuesday that no talks were taking place with Iran and that the Strait of Hormuz was open, contradicting Iran, which said the waterway remained shut.
A temporary ceasefire agreement expired on Monday and a senior Iranian official told Reuters that his country was moving to a due to the diplomatic stalemate, though there were no reports of strikes by either side on Tuesday.
SHIPPING UNCERTAINTY PERSISTS IN HORMUZ
The Strait of Hormuz carried about one-fifth of global oil and liquefied natural gas supplies before the U.S.-Israeli war on Iran began at the end of February. Its disruption remains a central concern for energy markets.
“Commercial shipping through Hormuz continues to face near full disruption while disagreements persist over the conditions governing maritime traffic,” said Ahmad Assiri, research strategist at brokerage Pepperstone.
Shipping through Hormuz slowed, data showed on Wednesday, as most shipowners avoided the waterway because of the uncertainty.
Iraq’s cabinet approved mechanisms for exporting Iraqi crude through specialised international and local companies and via multiple export outlets, the government said on Tuesday.
The contracts under the new mechanism will run for three months starting September 1, according to a statement issued after the cabinet meeting.
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Brent’s move above $91 a barrel suggests traders are pricing in a higher risk premium, with prices potentially returning to three-digit levels, Assiri from Pepperstone added.
Meanwhile, oil shipments from Russia’s western ports have fallen to about 2.3 million barrels per day in the first half of August, 15% below the initial loading plan, because of disruptions at the Black Sea port of Novorossiysk.
REUTERS
