Oil prices swung Wednesday as hopes for a U.S.-Iran deal to reopen the Strait of Hormuz collided with new Houthi missile attacks on Saudi oil tankers. Brent crude edged higher while WTI slipped, with Brent down nearly 12% and WTI down more than 11% for the week. Separately, U.S. government data showed an unexpected build in commercial crude oil inventories.
Oil prices seesawed on Wednesday, nursing steep weekly losses, as hopes for an imminent deal to reopen the Strait of Hormuz were offset by Iran-backed Houthi attacks on Saudi oil tankers in Yemen. Meanwhile, U.S. government data showed an unexpected build in commercial crude oil inventories.
Brent, WTI diverge as weekly losses mount
At 15:16 ET, Brent crude futures rose 0.2% to $79.54 a barrel, while U.S. West Texas Intermediate crude slipped 0.7% to $75.21 a barrel. Brent had slid nearly 12% for the week, while WTI had slumped more than 11%.
Hormuz deal hopes clash with Houthi attacks
Axios reported that the U.S., Iran and Oman were nearing an interim agreement to reopen the Strait of Hormuz, with Washington aiming to announce the deal on Wednesday. President Donald Trump said, "We'll know in 48 hours, I would say," telling reporters a deal was close.
Iran's foreign ministry said talks with Oman over the strait were ongoing, with a joint statement in final review pending. About one-fifth of global oil and liquefied natural gas flowed through the strait before the Iran war broke out in late February, but Kpler data showed traffic through the chokepoint fell to just eight vessels on Tuesday.
However, the Yemeni Armed Forces said two Saudi oil tankers were targeted with missiles, one off Yanbu and the other in the Gulf of Aden. Analysts noted traders have grown accustomed to a recurring cycle of threats and pullbacks between the U.S. and Iran, after Trump called off new strikes on Iran last weekend following days of air attacks that had all but dismantled a prior ceasefire framework.
Crude inventories post a surprise build
The EIA reported that U.S. commercial crude oil inventories increased by 2.5 million barrels in the week of July 31, against expectations of a 1.5 million-barrel draw. The Strategic Petroleum Reserve fell to 304.8 million barrels, the lowest level since July 1983, as the Trump administration continues releasing 172 million barrels over four months to keep a lid on prices.
Total crude stocks, including commercial and SPR holdings, dropped to 711.8 million barrels, the lowest since January 1984. Stocks at the Cushing, Oklahoma hub rose to 21 million barrels, just above tank bottoms.
Source: Commodities & Futures News
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