By Adedapo Adesanya
Brent crude crawled back to the $100 region, closing at $101.04 per barrel on Wednesday for the first time in six weeks as escalation between US and Iranian forces deepened concerns over supply. Also, US West Texas Intermediate (WTI) traded at $96.09 per barrel.
Since late May, oil benchmarks have generally traded well below $100 per barrel as optimism rose, in particular, after the US and Iran came to a temporary agreement to cease attacks, even though a permanent peace deal has not been reached.
An escalation in the US-Iran conflict and intensifying attacks on tankers in the Persian Gulf this week have spurred gains in the international oil market as Iran reported hits on American warships and tankers in the Persian Gulf, while the US said it had hit ten Iranian tankers.
A tanker carrying Iraqi crude was reported to have suffered a drone hit in the Persian Gulf, deepening worries about the flow of oil in the Gulf region.
Market analysts warned that the attacks suggest oil flows from the Persian Gulf are likely to remain disrupted for the foreseeable future.
The rally had accelerated this week after Iran-backed Houthis attacked Saudi energy facilities and set oil installations ablaze, increasing the risk that disruptions could spread across the wider Gulf region.
Six months of reduced oil exports from the Middle East due to the war in Iran have helped deplete oil stocks in some key consumers.
The US has also drawn heavily on its Strategic Petroleum Reserve (SPR), leaving it at its lowest level since 1982. The reserve now holds 289.7 million barrels after years of releases by former President Joe Biden and President Donald Trump aimed at cushioning consumers from high fuel prices.
High pump prices are a risk for President Trump’s Republican Party, which will be campaigning to retain narrow majorities in both houses of Congress during November’s midterm elections.
President Trump, meanwhile, accused Iran of trying to influence the American midterm elections in November, saying the war would end right after them.
Six commodity vessels passed through the Strait of Hormuz on Tuesday, down from nine a day earlier and below the 10-day average of about 12, preliminary Kpler shipping data showed. The waterway was responsible for transiting about one-fifth of the world’s oil and gas supply, making it key to worldwide energy trade.
The American Petroleum Institute (API) estimated that crude oil inventories in the US fell by 300,000 barrels in the week ending September 4. Official data from the US Energy Information Administration (EIA) will be released later on Thursday.
