- Oil prices rose on Wednesday after deadly attacks on vessels in the Red Sea and Gulf of Oman heightened concerns over risks to global shipping routes, even as diplomats signaled progress toward reopening the Strait of Hormuz.
- Brent crude gained about 1.24% to $90 per barrel, while WTI advanced 1.3% to $84.3 per barrel.
- Houthi rebels killed six people in an attack on a cargo ship in the Bab el-Mandeb Strait on Tuesday, marking the first reported fatalities from attacks on Red Sea shipping in more than a year.
- US forces fired missiles at a container ship that allegedly tried to break Washington's blockade of Iranian ports in the Gulf of Oman.
- Diplomatic efforts toward reopening the Strait of Hormuz show signs of progress, but markets remain cautious.
- Oil prices have jumped as attacks on shipping in the Middle East cast doubt on prospects for a breakthrough in negotiations to reopen the Strait of Hormuz.
- Brent crude rose more than 2 percent overnight into Wednesday, taking the international benchmark to close to $90 a barrel.
- Shipping firms carried roughly 20 million barrels of oil and petroleum products through the strait each day until Tehran effectively closed the waterway in retaliation for US and Israeli strikes.
- US Energy Secretary Chris Wright said on Tuesday that the seven-day average for oil leaving the strait had recovered to about 9 million barrels per day (bpd).
- OPEC crude production can only increase once there is a normalcy in flows in both directions through the Strait of Hormuz.
Oil prices have seen an upward trajectory over the past week amid conflicting signals regarding the reopening of the Strait of Hormuz, a vital route for global oil supplies.
Following deadly attacks by Iran-backed Houthi rebels, which resulted in six fatalities, oil futures rose significantly. Brent crude increased by over 2% to nearly $90 per barrel, reflecting heightened concerns over shipping safety in the Red Sea and Gulf of Oman.
U.S. forces also engaged in military action against a vessel attempting to breach a blockade of Iranian ports, further escalating tensions in the region.
Despite these developments, there are signs of diplomatic progress. Qatar's Foreign Ministry indicated that talks between Oman and Iran regarding the Strait of Hormuz are at an advanced stage, with hopes for a reopening soon. However, Iranian officials maintain that the strait will remain closed until the U.S. meets specific conditions, including lifting sanctions.
“Markets have not completely lost hope for a deal, but confidence is clearly eroding,” said Tim Waterer, chief market analyst at KCM Trade.
The Strait of Hormuz is crucial, carrying about one-fifth of global oil supplies before the conflict. Currently, maritime traffic is significantly reduced, with only 10 vessels crossing the strait on a recent Monday, compared to approximately 130 daily transits pre-war.
U.S. Energy Secretary Chris Wright noted that the average oil flow from the strait has recovered to about 9 million barrels per day, thanks to coordinated military efforts.
“Brent crude for October delivery stood at $89.61, up 24% since the US-Israel war on Iran began in late February. Just 10 vessels crossed the strait on Monday versus roughly 130 daily before the war, with Qatar saying talks are at an advanced stage.”
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