Oil prices rose on Wednesday morning as doubts about a US-Iran peace deal and attacks on two ships fuelled concerns about Middle East supply disruptions, even as industry data showed US crude inventories expanded.
Brent futures gained 72 cents, or 0.81%, to $89.63 a barrel, while US West Texas Intermediate (WTI) crude climbed 71 cents, or 0.85%, to $83.91.
Both benchmark contracts settled more than $1 higher on Tuesday, marking their highest closes since July 31 and extending gains after jumping about 5% on Monday as hopes for a peace deal between the US and Iran began to fade.
The United States and Yemen’s Iran-aligned Houthis reported separate attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday.
Iran’s top security official, Mohsen Rezaei, said on Tuesday that the vital Strait of Hormuz shipping route would remain closed unless the US accepted Iran’s conditions for ending the war, including the release of frozen Iranian assets and an end to other conflicts across the region.
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Shipping data showed that traffic through the Strait of Hormuz dropped to six vessels on Monday, compared with a 10-day average of about 11. Before the war, daily traffic through the waterway averaged 125 to 140 vessels.
On the supply front, a Reuters poll showed on Tuesday that US crude oil and fuel inventories were expected to have fallen last week.
However, market sources citing American Petroleum Institute data said US crude inventories rose sharply in the week ended August 7, while gasoline and distillate stocks fell.
Crude stocks rose by about 9.1 million barrels, while gasoline and distillate inventories fell by 1.5 million barrels and 596,000 barrels, respectively, from the previous week, the sources said.
The crude build far exceeded expectations and, if confirmed by the EIA report later on Wednesday, could ease market concerns about supply tightness, Haitong Futures said in a note.
Official numbers from the EIA, the statistical arm of the US Department of Energy, are due at 10:30am on Wednesday.
As for longer-term supply, the EIA expected disruptions of about 600,000 barrels per day to Middle East crude oil supplies to persist through the end of 2027.
