Oil prices held near multi-month highs on Wednesday after fresh U.S.-Iranian strikes and mined tankers in the Strait of Hormuz raised the threat of a wider supply disruption. Brent and WTI touched their strongest levels since July 24 before easing back as traders weighed the risk against signs crude keeps reaching the market.
Oil prices were little changed on Wednesday after climbing to more than one-month highs earlier in the session, as traders weighed the risk of supply disruptions following overnight U.S. and Iranian strikes against signs that crude supplies continue to reach the market. Brent crude futures rose 11 cents, or 0.12%, to $94.76 a barrel by 0949 GMT, while U.S. West Texas Intermediate crude was up 1 cent, or 0.04%, to $90.26.
Both benchmarks earlier climbed to their highest levels since July 24, touching session highs of $97.04 and $92.29 a barrel respectively.
Strait of Hormuz risk keeps traders on edge
The U.S. and Iran were back on a war footing Wednesday after the most significant exchange of fire in weeks, with Washington threatening more devastating strikes. The Islamic Revolutionary Guard Corps said the strikes would further restrict traffic through a waterway that carried about one-fifth of global oil consumption before the conflict and which Iran has effectively closed to commercial shipping. Two oil tankers hit sea mines and were disabled while attempting to transit the strait, Iran's Revolutionary Guards said in a statement carried by state media.
Ship-to-ship transfers ease the squeeze, for now
Ship-to-ship transfers in recent weeks have let some oil keep moving through the strait, easing pressure on the market, said Hamad Hussain, senior climate and commodities economist at Capital Economics — though he warned these flows remain highly exposed to further military strikes.
U.S. Secretary of Energy Chris Wright said Tuesday that 17 million barrels of oil transited the Strait of Hormuz on Monday, the highest level since the war cut flows through the waterway. But Hussain cautioned that if the conflict escalates further and disruption to Middle East shipping deepens, Brent crude prices could feasibly climb beyond $100 a barrel.
A binary risk for traders
Saxo Bank head of commodity strategy Ole Hansen said: "The market is facing a binary risk." An announcement that a deal has been reached could send prices tumbling, he said, while any escalation would further undermine the prospect of a peace deal — leaving oil highly volatile, with a potential $5 move in either direction on fresh developments.
Elsewhere, Moscow carried out a massive missile and drone attack on energy infrastructure in Ukraine's southern Odesa region overnight, transmission operator Ukrenergo said.
Source: Investing.com
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