Oil climbed for a fourth day as the US continued attacks on Iran in a bid to secure shipping through the Strait of Hormuz.
Event Context
Global benchmark Brent traded around $85 a barrel after gaining 12% in the previous three sessions, while West Texas Intermediate was near $80. The US launched more airstrikes on Iran on Wednesday, and said it disabled an unladen oil tanker headed for a port in the OPEC member.
Crude has soared to its highest in about a month as the escalation in the conflict revives concerns over flows from the energy-rich region, erasing part of a roughly 30% slump in the second quarter. Meanwhile, near-daily Ukrainian strikes on Russian fuel-producing plants and tankers further threaten global supply.
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“So not only have we now lost all of the Straits of Hormuz again, but we have also lost the crude oil and the refineries in Russia,” Jeff Currie, a senior adviser at Carlyle Group Inc., said in an interview on Bloomberg TV. “The situation in energy, I would argue, is pretty dire.”
Player Focus
US President Donald Trump pledged to intensify the bombardment of Iran until Tehran stops attacking ships in the strait and agrees to open the energy chokepoint. The Wall Street Journal reported that Trump is leaning toward expanding military operations and discussed the seizure of Kharg Island, home to the Islamic Republic’s main oil export terminal.
Tehran shows little sign of backing down. The Islamic Revolutionary Guard Corps said on Wednesday the strait will remain closed until the US ends its strikes and the blockade of Iranian ports.
The global economy faces a renewed challenge if shipping through the strait isn’t resolved in a matter of weeks, International Energy Agency Executive Director Fatih Birol said in an interview with Bloomberg TV.
Even so, tanker traffic continued. US-assisted transits reached double digits on Tuesday night, Central Command spokesman Captain Tim Hawkins said. Of the roughly 300 ships that passed through the waterway over the past week, nearly half were helped by US forces.
Team Analysis
Iran’s recent attacks on oil tankers are jeopardizing an innovative trade that rapidly expanded in recent months to become one of the main ways for getting crude out of the Persian Gulf — so-called shuttle runs. The system, where ships transfer crude to vessels outside the strait, has become a major lifeline for countries including the United Arab Emirates during the war, although it’s possible any pause could be short-lived.
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Meanwhile, US crude stockpiles dropped by almost 1.7 million barrels last week as oil exports rose — though they remain below pre-war averages, according to Energy Information Administration data released Wednesday. Inventories at Cushing, Oklahoma — the delivery point for WTI — climbed above the 20 million barrel mark seen as the hub’s operating minimum.
