Oil climbed to three-week highs on Thursday as the stalemate in the Iran war kept raising the risk of further supply disruption from the Middle East. Brent and WTI both gained for a fifth straight session, while the UAE cut all financial and economic ties with Iran and Trump warned against any country giving Tehran a "lifeline."
Brent and WTI extend a five-session rally
Brent crude futures for October delivery rose $1.20, or 1.3%, to $92.82 a barrel by 0813 GMT, while U.S. West Texas Intermediate crude futures for September added 92 cents to $86.75 a barrel. The more-active October WTI contract climbed $1.13, or 1.3%, to $85.52.
Both benchmarks hit their highest levels since late July during the session, extending a rally that reached a fifth straight session. They had already settled on Wednesday at their highest since July 24. The September WTI contract expires later on Thursday.
According to Reuters: "Tensions in the Middle East remain high, leaving room for further supply disruptions", UBS analyst Giovanni Staunovo said, adding that lower oil exports from the region are tightening the market again.
UAE cuts ties with Iran as the strait standoff continues
The UAE's decision to suspend all financial and economic transactions with Iran until further notice has refocused attention on the fraught relationship between the Gulf Arab producer and Tehran. Trump said on Tuesday that no talks were taking place with Iran and that the Strait of Hormuz was open, but Iran said the waterway remained shut.
Trump warned on Wednesday of economic consequences against any country that provided a lifeline to Iran. Shipping traffic through the strait was unchanged from the day before as discussions to end the conflict stayed deadlocked. Before the war began with U.S. and Israeli strikes on Iran on February 28, shipments equal to about one-fifth of global consumption moved through the waterway; current flows remain far below pre-war levels.
Fuel supply tightens even as crude stockpiles rise
The war has also hit the supply of refined fuels and drawn down inventories, leaving refiners with less crude available to process. U.S. stockpiles of distillate fuel, including diesel and heating oil, fell last week for a third week, the Energy Information Administration said on Wednesday.
Crude inventories, however, unexpectedly rose by 4.4 million barrels over the same period. The mismatch underscores how the conflict is squeezing fuel output even as raw crude piles up in storage.
Source: Commodities & Futures News
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