Oil prices rose on Wednesday as attacks on tankers near the Strait of Hormuz and on Saudi energy facilities kept the market on edge. Shipping costs have also soared amid the escalating tensions.
Crude oil prices climbed Wednesday as worries over Middle East supply disruptions persisted. Brent crude futures gained 0.86% to $109.73 a barrel as of 3:33 a.m. ET. U.S. West Texas Intermediate rose 0.78% to $98.58 a barrel in the same period.
Attacks near Hormuz and on Saudi sites
Iran's Revolutionary Guards said on Tuesday that naval mines had prevented three tankers from passing through the Strait of Hormuz on routes Tehran deemed unauthorized. The IRGC said two of the tankers were set ablaze and halted.
Meanwhile, Yemen's Houthi militants claimed responsibility on Monday for strikes targeting Saudi Aramco facilities in Yanbu, the Shaybah oilfield and airports in Riyadh and Abha.
Freight costs surge
The tensions have also sent global oil shipping costs soaring. According to a Goldman Sachs report published Tuesday, the global average crude freight rate has surged above $20 per barrel, compared with just $3 a year earlier. Rates have eased slightly in recent days but remain roughly seven times higher than a year ago.
Goldman estimated that war-risk premiums for crossing the Strait of Hormuz accounted for about $7 of the $20 year-on-year increase, while ship-to-ship transfers outside the Persian Gulf contributed another $4.
However, the bank warned that elevated shipping costs could widen price differences between crude grades, squeeze refiners' profit margins and ultimately push up refined fuel prices.
Source: CNBC
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