LONDON, United Kingdom / MENA Newswire / – Oil prices rose on Wednesday after falling to two-month lows in the previous session. Brent futures climbed 71 cents, or 0.78%, to US$92.20 a barrel by 01:19 GMT. US West Texas Intermediate crude rose 49 cents, or 0.57%, to US$86.53. Traders weighed hopes for de-escalation in the war with Iran against continuing attacks on shipping in the Strait of Hormuz. The gains extended later in the day.
Brent had settled $1.08, or 1.17%, lower at US$91.49 on Tuesday, while WTI ended at US$86.04. Both benchmarks slid to their weakest levels since late August during Tuesday’s trade. Prices initially fell by more than $3 a barrel after US officials played down the need for further military strikes against Iran. Losses narrowed after an Iranian security official said no talks were taking place between the two sides.
Prices gained about 1% by mid-afternoon in London. Brent was up $1.22, or 1.3%, at US$92.71 a barrel by 14:12 GMT, while WTI gained $1.09 to US$87.13. The move followed comments from Iran’s security chief that Tehran would not allow any enriched nuclear material to leave the country. Washington has said nuclear issues must be part of any initial negotiations to end the conflict. The World Bank has projected energy prices to rise 32% this year.
Shipping attacks keep supply fears alive
Attacks on vessels in the Strait of Hormuz show little sign of easing. Data from the Washington Institute for Near East Policy show 37 ships were attacked in October, the highest monthly total since the war began. The United Kingdom Maritime Trade Operations agency said a tanker was struck northeast of Lima in Oman on Tuesday. Iran’s Revolutionary Guards Navy said two tankers caught fire after hitting naval mines on an unauthorized route in the strait.
About 20% of the world’s oil supply passed through the Strait of Hormuz before the United States and Israel began attacking Iran in February. LSEG Oil Research said in a November 10 note that any rise in flows after a deal would depend on mine clearance and insurance costs. It added that shipowners would also need to be willing to take the risk. Supply fears have rippled into retail, with Costco limiting synthetic oil purchases in September.
Diplomacy and stockpiles shape the outlook
UBS analyst Giovanni Staunovo said prices are being supported by fading hopes of an imminent de-escalation. June Goh, a senior analyst at Sparta Commodities, said vessel attacks in Gulf shipping lanes have increased amid uncertainty over diplomacy. She said the key driver is whether Iran engages with US demands for a diplomatic agreement. US Secretary of State Marco Rubio told G7 foreign ministers in Paris on Tuesday that US sanctions and a naval blockade were working.
On the supply side, US crude stocks rose by 9 million barrels in the latest week, according to market sources citing American Petroleum Institute data. Official government figures were due later on Wednesday. In Russia, a drone attack caused a fire in the port area of Ust-Luga on the Baltic coast, injuring three workers. Industry sources said Russian refining capacity has fallen by about 30% since late October after renewed Ukrainian drone attacks.