Brent crude futures rose 26 cents to $91.28 a barrel in early trading, marking a fourth consecutive session of gains, while US West Texas Intermediate crude advanced 37 cents to $85.31. Brent had settled at $91.02 on Tuesday, its highest close in more than three weeks, after touching stronger levels during the session.
The latest rise followed the expiry on Monday of a temporary ceasefire arrangement between Washington and Tehran without a broader agreement to halt a conflict that has reshaped energy flows across the Middle East. Iran has signalled that its armed forces will move towards a “fully offensive” posture after diplomatic efforts failed to produce a permanent settlement.
US President Donald Trump has ruled out extending the expired arrangement and said no talks or negotiations with Tehran were under way or scheduled. Iran, however, has maintained that it remains willing to negotiate under acceptable terms while rejecting demands that it characterises as surrender.
The impasse has sharpened uncertainty surrounding the Strait of Hormuz, one of the world’s most important energy corridors. Washington says the waterway is open, while Tehran maintains that restrictions remain in force pending fulfilment of conditions linked to the June interim agreement. Commercial traffic through the strait remains substantially below normal levels.
The conflicting claims have become a central issue for crude markets because Gulf producers rely heavily on Hormuz to reach international buyers. Before the war, roughly a fifth of global oil and liquefied natural gas supplies moved through the waterway, leaving traders highly sensitive to attacks, shipping restrictions and changes in Iranian policy.
Security risks have also increased around commercial shipping. Missiles were fired towards maritime traffic in the strait this week, while a bulk carrier was struck near the waterway east of Oman. The incidents have reinforced concerns that even without a sustained exchange of strikes between Washington and Tehran, vessels operating in the region remain exposed.
Iranian officials have warned that Tehran could undertake more precise military action if diplomatic efforts fail and have linked their harder military posture to what they describe as continuing US pressure. The prospect of further attacks has forced shipping companies and energy traders to reassess routes and insurance costs across the Gulf.
Oil markets have already absorbed a substantial geopolitical premium during the conflict. Brent has at points climbed as high as $126 a barrel, about 75 per cent above levels prevailing before the war, although prices later retreated as intermittent diplomatic initiatives raised hopes that exports could normalise.
Those hopes strengthened earlier this month when comments surrounding negotiations triggered a sharp fall in crude prices. Brent dropped more than 5 per cent on August 4 to $79.36 a barrel as expectations rose that an agreement could improve oil movements through Hormuz. That optimism subsequently faded, sending the benchmark back above $90.
Producers and buyers are increasingly seeking alternatives to reduce exposure to the strait. Iraq has approved mechanisms aimed at facilitating exports through alternative arrangements, with new contracts scheduled to begin from September 1. Chinese shipping companies have also started rerouting some oil shipments to avoid both Hormuz and the Bab al-Mandeb passage.
Saudi energy shipments have meanwhile benefited from offshore transfer operations that allow some crude to reach buyers without relying on conventional movements through the most exposed parts of the Gulf. Such measures can ease pressure at the margins but cannot fully replace the enormous volumes normally transported through Hormuz.
Supply signals outside the Middle East offered limited relief. Preliminary US inventory figures indicated declines in crude and distillate stocks alongside an increase in petrol inventories. Markets were awaiting official data expected to show that crude inventories fell by about 600,000 barrels in the week ended August 14.
The energy shock is also spreading beyond commodity markets. Brent remaining above $90 has added to concerns that elevated fuel costs could keep inflation pressures persistent, while long-term government borrowing costs have risen across several major economies. US 30-year Treasury yields climbed to levels not seen for nearly two decades before easing slightly during Asian trading on Wednesday.
Follow Arabian Post
Select Arabian Post as your preferred source on Google and MSN News for trusted business news and Arab politics and updates.
