Oil Prices Rise for Fourth Day as Hormuz Uncertainty Supports Markets

Oil prices climbed for a fourth consecutive session on Wednesday as investors assessed conflicting claims from Iran and the United States over whether the Strait of Hormuz is open to shipping.

Brent crude futures rose 69 cents, or 0.8 percent, to $91.71 a barrel by 7:15 a.m. Saudi time. US West Texas Intermediate crude increased 76 cents, or 0.9 percent, to $85.70 a barrel.

Both benchmarks closed at their highest levels in more than three weeks on Tuesday as hopes of a diplomatic breakthrough between Washington and Tehran weakened.

US President Donald Trump said Tuesday that no talks were taking place with Iran and maintained that the Strait of Hormuz remained open. Iran, however, has continued to say the strategically important waterway is closed to shipping.

The uncertainty has slowed maritime traffic through the strait, with many shipowners avoiding the route because of a lack of clarity over when normal passage will resume.

“The shipping risks are increasing again as attacks from Iran and Houthis remain prevalent in both key chokepoints, keeping oil prices supported in the near term,” said June Goh, senior oil market analyst at Sparta Commodities.

The two major shipping chokepoints referenced by Goh are the Strait of Hormuz and the Bab el-Mandeb Strait, both of which are critical routes for global energy trade.

Goh said Gulf oil producers were seeking alternative routes to move crude toward the Gulf of Oman. Sustained use of those routes could allow producers to restart some output that has been shut in because of the disruptions.

Iraq is also taking steps to reduce its dependence on exports passing through the Strait of Hormuz. The Iraqi cabinet approved arrangements allowing crude exports through several outlets using international and local companies.

Under the mechanism, contracts will run for three months beginning September 1, according to a government statement.

Shipping disruptions are also affecting major Asian oil buyers. Two large Chinese shipping companies have stopped sending oil tankers through the Strait of Hormuz and Bab el-Mandeb, instead collecting cargoes outside the Gulf.

The latest price gains have come as the temporary ceasefire between the US and Iran expired on Monday. A senior Iranian official told Reuters that Tehran was preparing for a more confrontational stance after diplomatic efforts stalled, although no fresh attacks by either side were reported on Tuesday.

In the United States, crude oil and distillate inventories fell last week while gasoline stocks increased, according to market sources citing American Petroleum Institute data.

Official figures from the US Energy Information Administration were due later Wednesday. Analysts polled by Reuters expected US crude inventories to have declined by around 600,000 barrels in the week ending August 14.

The combination of supply concerns, disrupted shipping routes and uncertainty over diplomacy continues to support oil prices, while traders remain focused on developments around the Strait of Hormuz.