Summary
Oil prices climbed for a third straight trading session in Asian markets after renewed U.S. pressure on Iran and the return of a shipping blockade through the Strait of Hormuz. Market participants pushed Brent and West Texas Intermediate (WTI) to their highest levels in about a month amid security concerns for Middle East shipments and mixed supply signals from industry inventory data.
Market moves
As of 21:01 ET (01:01 GMT), Brent futures for September delivery rose 1.7% to $86.15 per barrel, while WTI crude futures advanced 1.3% to $80.34 per barrel. Both benchmarks were trading near one-month highs after a surge of nearly 10% at the start of the week.
Driver: U.S. statements and actions toward Iran
U.S. President Donald Trump, in a television interview aired late Tuesday, warned that U.S. strikes on Iran would intensify unless Tehran returned to negotiations. He said that, if no deal were reached, Washington would target Iran's power plants and bridges next week. He added that U.S. forces would continue striking Iranian military and coastal infrastructure, and that energy facilities would be held until later in the sequence of actions.
The president also stated that U.S. officials had remained in contact with Iranian counterparts and asserted that Tehran had no choice but to enter negotiations.
Shipping and geopolitical context
The U.S. resumed its blockade of Iranian shipping on Tuesday evening. Shipping traffic through the Strait of Hormuz has slowed sharply amid the renewed conflict, with reported attacks on commercial vessels and Gulf tankers contributing to reduced movement through the waterway.
Markets additionally considered Mr. Trump's decision to reverse a proposal to impose a 20% fee on commercial cargo transiting the Strait of Hormuz after appeals from key U.S. allies in the Gulf to abandon that plan.
Inventory data and near-term outlook
Industry figures from the American Petroleum Institute indicated that U.S. crude oil inventories fell by 56,000 barrels last week, a smaller draw than the roughly 2.7 million barrel draw that had been expected. Investors were awaiting the official U.S. Energy Information Administration (EIA) data due later on Wednesday for confirmation of the weekly stockpile change.
Key points
- Brent gained 1.7% to $86.15 per barrel and WTI rose 1.3% to $80.34 per barrel, each near one-month highs after a near 10% surge earlier in the week.
- President Trump warned of intensified strikes on Iran and said the U.S. had resumed targeting Iranian military and coastal infrastructure while postponing energy facilities from immediate attack.
- The U.S. blockade of Iranian shipping through the Strait of Hormuz was restarted, and shipping activity has slowed amid attacks on commercial vessels and Gulf tankers.
Risks and uncertainties
- Escalation of military action could further disrupt shipping through the Strait of Hormuz, affecting crude flows and insurance costs for tankers - a direct risk to energy and shipping sectors.
- Inventory data remain uncertain: the American Petroleum Institute reported a small 56,000-barrel draw versus an expected 2.7 million-barrel draw, and market participants are awaiting official EIA confirmation.
- Policy reversals and proposals, such as the withdrawn idea of a 20% fee on cargo through the Strait, create additional uncertainty for markets and regional trade dynamics.
Investors and market watchers continued to weigh developments in Washington and the Gulf, looking for confirmation from official supply data and further signals on policy and military actions that could influence crude availability and prices.