Oil continues to rise in price after new U.S. and Iranian strikes
Kyiv • UNN
Brent rose to $95.40, while WTI rose to $90.66 after new U.S. and Iranian strikes. Tehran announced restrictions on traffic through the Strait of Hormuz.
Oil prices rose at the start of trading on September 2 after surging the previous day. This came amid growing concerns about supply disruptions following a new exchange of strikes between the United States and Iran, which weakened hopes for a swift easing of tensions in the Middle East. UNN writes about this, citing Reuters.
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Brent crude futures rose by 75 cents, or 0.8%, to $95.40 per barrel by 3:45 GMT (6:45 a.m. Kyiv time), while U.S. West Texas Intermediate crude futures climbed by 44 cents, or 0.5%, to $90.66.
On Tuesday, prices for both contracts surged by more than $4, marking the largest increase in Brent crude prices since July 24 and in WTI prices since July 23.
The United States said it had carried out a series of airstrikes against targets in Iran overnight on September 2, prompting a retaliatory response from Tehran and marking the most serious escalation in the conflict between the two countries in recent weeks.
Iran's Islamic Revolutionary Guard Corps (IRGC) said that the U.S. attacks would further restrict movement through the Strait of Hormuz. This is the most important waterway through which about one-fifth of the world's oil was transported before the conflict, and which Iran has effectively closed to commercial shipping.
"The events of recent days have once again brought the risks to regional oil supplies to the forefront… We have observed oil flowing through the Strait of Hormuz despite the deadlock between the United States and Iran, but rising tensions clearly threaten passage through the strait," ING said in an analytical note to clients.
The IRGC also said it had struck a U.S. military base in Jordan with ballistic missiles, killing a large number of U.S. service members, according to the IRGC, while Iranian state media reported a large-scale drone attack on the U.S. base.
Jordanian forces said their air defense systems intercepted 10 of the 13 ballistic missiles that entered their airspace, while two U.S. officials said that, so far, no American casualties had been reported as a result of the attacks. Separately, Kuwait said its armed forces were responding to hostile drone activity.
The latest exchange of strikes followed an escalation in fighting over the weekend, the first since July, and came after attacks on two tankers that left the Strait of Hormuz on September 1, causing further disruptions to oil supplies and forcing traders to seek alternative sources of oil.
Two more ships were attacked in and around the Strait of Hormuz01.09.26, 19:30 • 5328 views
"The oil market is no longer assessing only the risk of war; it is increasingly assessing the cost of an unresolved war," said Priyanka Sachdeva, head of market analysis at Phillip Nova.
"Until clear evidence emerges that negotiations can lead to a long-term settlement and normal oil flows through the strait resume, the risk premium in the oil market is likely to remain high," she said.
Meanwhile, in the United States, the world's largest oil producer, crude oil inventories fell by 2.6 million barrels in the week ended August 28, while distillate stocks, including diesel fuel and heating oil, declined by 265,000 barrels, according to market sources.