Oil prices surged nearly 7% on Wednesday, as massive airstrikes resumed in the Middle East, dashing hopes for a quick end to the US-Israeli war with Iran, while industry data showed a decline in US oil inventories, UNN reports citing Reuters.
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Brent crude futures rose $5.70, or 6.8%, to $89.79 a barrel by 13:35 GMT (16:35 Kyiv time). US West Texas Intermediate (WTI) crude rose $4.94, or 6.2%, to $84.20 a barrel.
"The resumption of military strikes in the Middle East and statements by Iranian officials about their desire to control shipping through the Strait of Hormuz amid declining oil flows through the strait are again pushing oil prices up," said UBS analyst Giovanni Staunovo.
On Wednesday, the US and Saudi Arabia struck Iran-backed groups in Iraq, accusing them of drone attacks on Saudi oil facilities.
US and Saudi Arabia struck Iranian proxy forces in Iraq29.07.26, 08:55
The strikes came hours after the US military said it had prevented a surprise Iranian attack on American troops in the region. Iran said it shelled ships in the Strait of Hormuz and US bases in Jordan.
Iran attacked a US base in Jordan29.07.26, 05:33
Prices surged after US President Donald Trump promised retaliatory strikes against Iran in a Fox News interview.
Meanwhile, Tehran rejected Oman's proposal for joint regional management of the Strait of Hormuz, a senior Iranian official told Reuters on Wednesday, dashing hopes for a resolution to the standoff that has paralyzed Gulf trade for months.
Iran rejected Oman's proposal for equal control over the Strait of Hormuz - WSJ29.07.26, 06:28
Only a few vessels carrying commodities passed through the Strait of Hormuz this week, while on Wednesday five vessels passed through the Bab el-Mandeb Strait, an alternative route for Saudi oil supplies to Asia, compared to 39 on Tuesday. That is the highest number since July 19, shortly before Iran-backed Yemeni Houthis announced a naval blockade of Saudi Arabia.
The Yemeni Houthi group is also considering imposing fees on commercial vessels transiting the southern Red Sea, regional sources familiar with the situation told Reuters. According to six sources familiar with the matter, China has held direct talks with the group to allow its tankers to pass through the region without risk of attack.
"We believe Brent crude prices will continue to trade in the $80-100 per barrel range in the near term as the conflict in the Middle East escalates," said Suvro Sarkar, head of energy research at DBS Bank.
According to him, the situation escalated after US President Donald Trump signaled a return to diplomacy earlier this week.
"This series of intermittent negotiations means that a full lifting of the Strait of Hormuz blockade will not be achieved, and oil prices could reach a higher level of around $80 per barrel even under a de-escalation scenario," he said.
On Tuesday, market sources, citing data from the American Petroleum Institute, said US oil inventories fell by about 3.3 million barrels for the week ended July 24.
Additional support for prices will come, according to Reuters sources, from a likely three-month halt to OPEC+ oil output increases starting in October after the producer group completes its planned recovery of production following voluntary cuts.