Oil prices climbed for a second straight day on Wednesday as uncertainty over a possible US-Iran peace deal and fresh attacks on commercial shipping raised fears of supply disruptions in the Middle East.
Brent crude futures gained 75 cents, or 0.84 per cent, to $89.66 a barrel by 0553 GMT. US West Texas Intermediate crude rose 72 cents, or 0.87 per cent, to $83.92 a barrel. Both benchmarks had advanced by more than $1 earlier in the session after posting their highest closing levels since July 31 on Tuesday.
The latest gains came after oil prices surged around 5 per cent on Monday when hopes for a diplomatic breakthrough between Washington and Tehran weakened. US President Donald Trump added to the uncertainty by saying Iran should compensate victims of wars, attacks and protests as part of any agreement.
Market analysts said the shifting tone between diplomacy and confrontation continues to drive sharp swings in crude prices.
Priyanka Sachdeva, head of market insights at Phillip Nova in Singapore, said investors were reacting to a market caught between the prospects of a peace deal and the risk of a wider conflict. She added that frequent changes in the political narrative were creating opportunities for short term traders despite the heightened volatility.
Concerns over supply were also fuelled by separate reports from the United States and Yemen’s Iran-backed Houthis of attacks on ships in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday.
Iranian security official Mohsen Rezaei said the Strait of Hormuz would remain closed unless Washington accepted Tehran’s conditions for ending the conflict, including the release of frozen Iranian assets and an end to other regional disputes. Shipping data showed only eight vessels passed through the waterway on Tuesday, compared with 125 to 140 ships a day before the conflict.
On the supply side, industry data painted a mixed picture. Sources citing figures from the American Petroleum Institute said US crude inventories increased by about 9.1 million barrels in the week ending August 7, while gasoline and distillate stocks declined.
Analysts said if the official US Energy Information Administration data, due later on Wednesday, confirms the sharp rise in crude inventories, it could ease concerns over tight global supplies despite ongoing geopolitical risks.
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