Crude oil prices continued to rise on Wednesday, hitting their highest level in nearly four weeks, as tensions in the Middle East added to concerns about global supplies. Brent crude rose 60 cents, or 0.7%, to settle at $91.62 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 89 cents, or 1.1%, to settle at $85.83 a barrel. Both benchmarks closed at their highest levels since July 24.
The price increase is mainly related to the escalation of tensions in the Middle East, especially after the decision of the United Arab Emirates to suspend financial and economic transactions with Iran. The Strait of Hormuz worries the markets. The Strait of Hormuz, one of the most important energy transport routes in the world, remains the focus of investors.
US President Donald Trump declared the strait open on Tuesday, while Iranian authorities maintain that the sea passage remains closed. Kpler data shows that only six cargo ships passed through the strait on Tuesday, compared with nine the day before and an average of 11 ships per day over the previous ten days. Before the start of the war between the US, Israel and Iran in late February, about a fifth of global oil and liquefied natural gas (LNG) supplies passed through Hormuz. Any prolonged restrictions on traffic in the corridor could put further pressure on international energy prices. Brent towards $100.
Analysts warn that Brent crude could continue to rise if tensions in the region escalate. According to Pepperstone strategist Ahmad Asiri, Brent’s move above $91 shows that the market is pricing in a higher geopolitical risk premium. A further escalation could bring the possibility of a $100 per barrel price back into the picture. At the same time, problems with Russian exports are also putting pressure on the market. Oil exports from Russia’s western ports fell to about 2.3 million barrels per day in the first half of August, about 15% below initial loading plans.
