Oil prices jumped more than 2% on Thursday to their highest level in nearly a month after President Donald Trump threatened retaliation against nations supporting Iran. The war between the U.S., Israel and Iran has disrupted shipping through the Strait of Hormuz for months, and one oil trading advisory firm sees no resolution close at hand.
Brent crude futures settled up $2.16, or 2.4%, at $93.78 a barrel, the highest since July 24. U.S. West Texas Intermediate crude for September gained $2, or 2.3%, to $87.83 a barrel, also its highest level since July 24.
The rally followed Trump's Wednesday evening warning of economic warfare and isolation against Tehran, with consequences threatened for any country giving Iran a lifeline. U.S. Treasury Secretary Scott Bessent said he would hold a press conference on Monday to detail the administration's next steps.
War in the Strait keeps supply stranded
Thousands of people have been killed in the Iran war, which began on February 28 when the U.S. and Israel launched military strikes on Iran. Since then, Tehran's blockade of the Strait of Hormuz and Iranian attacks on energy facilities across the Middle East have sharply disrupted the flow of crude oil and gas to other parts of the world.
Oil trading advisor Ritterbusch and Associates said in a note that the new threats appear unlikely to sway Iran into relinquishing control of the Strait, absent major concessions from the U.S. According to Ritterbusch and Associates: "the beat goes on with no resolution in sight" that would spur a major decline in oil prices back to levels seen before the war.
Shipping traffic through the Strait of Hormuz on Wednesday was unchanged from the day before, far below pre-war levels. Before the war, shipments equal to about one-fifth of global consumption moved through the waterway. This week, the United Arab Emirates suspended all financial and economic transactions with Iran until further notice, underscoring the strained ties between the Gulf Arab oil producer and Tehran.
Fuel stockpiles drawn down as refiners feel the squeeze
The war has also hit the supply of refined fuels and drawn down inventories, leaving refiners with less crude to work with. U.S. stockpiles of distillate fuel, including diesel and heating oil, fell last week for a third straight week, the Energy Information Administration said Wednesday. Crude inventories, however, unexpectedly rose by 4.4 million barrels.
Trump's threats against nations helping Iran could become a sensitive topic in U.S.-China relations, said Alex Hodes, an energy analyst at StoneX, who noted that China is the largest importer of Iranian crude oil.
Source: Investing.com
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