Key points
- Brent rises above $91 a barrel
- Hormuz shipping remains below normal levels
ISLAMABAD: Oil prices rose for a fourth consecutive session on Wednesday as conflicting claims from the United States and Iran over shipping through the Strait of Hormuz kept markets focused on the risk of supply disruptions.
Brent crude futures gained 26 cents, or 0.29 per cent, to $91.28 a barrel in early trade. Likewise, US West Texas Intermediate crude rose 37 cents, or 0.44 per cent, to $85.31.
Both benchmarks had closed at their highest levels since July 24 in the previous session.
The latest gains came after US President Donald Trump said the Strait remained open, contradicting Iran’s position that the strategic waterway would stay closed until Washington met conditions set out in an earlier interim agreement.
The uncertainty is significant because the Strait of Hormuz normally carries about one-fifth of global oil and liquefied natural gas shipments.
Recent shipping data shows traffic has fallen dramatically: only six commodity vessels crossed on Monday, compared with a 10-day average of 11, and no very large crude carriers or LNG tankers were recorded.
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The lack of clarity has made traders increasingly sensitive to developments around the waterway.
The temporary US-Iran ceasefire has expired without a broader agreement, and Washington and Tehran continue to issue conflicting statements about negotiations and the status of Hormuz.
Oil priced in on prolonged disruptions
Some producers are already preparing for prolonged disruption. Iraq has approved new mechanisms allowing crude exporters to use alternative routes and contracts from Sept 1 to reduce reliance on Hormuz.
Chinese shipping companies have also begun rerouting oil shipments to avoid both Hormuz and the Bab el-Mandeb Strait.
The market has nevertheless avoided a much sharper price spike, partly because alternative supply routes, inventories and weaker demand are cushioning the immediate impact.
US crude inventories are also expected to have fallen by about 600,000 barrels in the week ended Aug 14, according to preliminary estimates cited by Reuters.
For oil-importing economies, however, prolonged restrictions could still raise freight, fuel and inflation costs.
A sustained reduction in Hormuz traffic would be particularly significant for Asian buyers, which depend heavily on Gulf crude and would face longer shipping routes and higher insurance costs if tankers are forced to reroute.
