Oil Prices Rise as US-Iran Uncertainty and Shipping Attacks Stir Supply Fears

Oil prices moved higher on Wednesday as uncertainty over a possible US-Iran peace agreement and attacks on commercial shipping raised concerns about disruptions to crude supplies from the Middle East.

Brent crude futures gained 75 cents, or 0.84%, to $89.66 a barrel by 8:53 a.m. Saudi time. US West Texas Intermediate crude rose 72 cents, or 0.87%, to $83.92 a barrel. Both benchmarks had climbed by more than $1 earlier in the session.

The gains followed increases of more than $1 on Tuesday, when both contracts reached their highest closing levels since July 31. Prices had surged around 5% on Monday as expectations for a US-Iran peace agreement weakened.

Tensions increased after US President Donald Trump demanded that Iran provide compensation for people killed during wars, attacks and protests. The latest remarks added to uncertainty over whether negotiations could prevent further escalation in the region.

“The Middle East is increasingly becoming a seesaw between ‘deal’ and ‘war’,” said Priyanka Sachdeva, head of market insights at Phillip Nova in Singapore. She said the shifting expectations were causing oil prices to swing between roughly $70 and $90 a barrel.

Shipping concerns added to the pressure on oil markets. The United States and Iran-aligned Houthi forces in Yemen reported separate attacks involving shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday.

The Strait of Hormuz is one of the world’s most important oil shipping routes. Iranian security official Mohsen Rezaei said the waterway 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 conflicts.

Shipping data showed that only eight vessels passed through the Strait of Hormuz on Tuesday, the lowest level in a week. Before the conflict, around 125 to 140 vessels crossed the waterway each day.

The market was also watching US inventory figures for signs of changing supply conditions. Industry sources citing American Petroleum Institute data said US crude inventories increased by about 9.1 million barrels during the week ended August 7.

Gasoline stocks fell by about 1.5 million barrels, while distillate inventories declined by around 596,000 barrels. The increase in crude stocks was much larger than analysts had expected.

Haitong Futures said a similar increase in official figures could reduce concerns about tight supplies. The US Energy Information Administration was due to release its inventory report later on Wednesday.

Despite the rise in crude stocks, geopolitical risks remained the main focus for traders, with developments between Washington and Tehran likely to continue driving sharp movements in oil prices.