LONDON (Reuters): Oil prices extended gains on Wednesday, with Brent crude approaching the $90-per-barrel mark as fading prospects for a US-Iran peace agreement and renewed attacks on shipping in key Middle East waterways heightened concerns over global supply disruptions.
Brent crude futures rose 72 cents, or 0.81%, to $89.63 a barrel, while US West Texas Intermediate (WTI) crude gained 71 cents, or 0.85%, to $83.91 in early trading.
Both benchmark contracts had settled more than $1 higher on Tuesday, reaching their highest closing levels since July 31 after surging around 5% on Monday as expectations for a breakthrough in US-Iran diplomacy weakened.
Market sentiment was further supported after the United States and Yemen’s Iran-aligned Houthi movement reported separate attacks on commercial shipping in the Strait of Hormuz and the Bab el-Mandeb Strait, two of the world’s most strategically important maritime oil routes.
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Iran’s senior security official, Mohsen Rezaei, said the Strait of Hormuz would remain closed unless Washington accepted Tehran’s conditions for ending the conflict, including the release of frozen Iranian assets and an end to other regional hostilities.
Shipping data showed traffic through the Strait of Hormuz fell to six vessels on Monday, compared with a 10-day average of about 11 vessels. Before the conflict, daily traffic through the waterway typically ranged between 125 and 140 vessels, underscoring the scale of disruption.
Meanwhile, industry data from the American Petroleum Institute (API) indicated US crude oil inventories increased by approximately 9.1 million barrels during the week ended August 7, significantly exceeding market expectations. Gasoline inventories declined by 1.5 million barrels, while distillate stocks fell by 596,000 barrels, according to market sources.
Analysts said the sharp increase in crude inventories could help ease concerns over tightening supplies if confirmed by official figures from the US Energy Information Administration (EIA), which is scheduled to release its weekly petroleum status report later on Wednesday.
Looking beyond the immediate market, the EIA expects disruptions to Middle East crude oil supplies of around 600,000 barrels per day to continue through the end of 2027, highlighting the longer-term impact of regional instability on global energy markets.