Brent, WTI Futures Climb on Middle East Supply Worries
Global oil benchmarks Brent and West Texas Intermediate (WTI) climbed to over three-week highs, driven by ongoing concerns about Middle East supply disruptions from the Iran war. This occurred despite an unexpected increase in US crude stockpiles.
Futures Advance on Supply Fears
Brent crude futures for October delivery increased $2.19, or 2.39 per cent, reaching $93.81 a barrel by 1257 GMT on Thursday. US West Texas Intermediate (WTI) September futures added $2.33, closing at $88.16 a barrel. The more active October WTI contract also gained $2.44, or 2.89 per cent, to $86.83.
Both benchmarks achieved their highest levels since July 24, marking a fifth consecutive session of price advances. UBS analyst Giovanni Staunovo linked these gains to ongoing Middle East tensions. He stated these conditions leave room for further supply disruptions, tightening the oil market.
Geopolitical Factors Intensify
The United Arab Emirates (UAE) recently suspended all financial and economic transactions with Iran. This action refocused attention on strained ties between the major Gulf Arab oil producer and Iran. US President Donald Trump declared no talks were underway with Iran and asserted the Strait of Hormuz was open. Iran, however, maintained the vital waterway remained shut.
Trump also warned of economic consequences for any nation providing "any type of lifeline to Iran." Shipping data on Wednesday revealed unchanged traffic through the strait, with conflict resolution discussions deadlocked.
Supply Impact and Inventories
The war, which began with US and Israeli strikes on Iran on February 28, continues to affect energy flows. Prior to this conflict, approximately one-fifth of global consumption moved through the Strait of Hormuz. Current flows are significantly below pre-war levels. The conflict also impacted refined fuel supplies, drawing down inventories.
The Energy Information Administration (EIA) reported US crude inventories unexpectedly rose by 4.4 million barrels last week. Conversely, distillate fuel stockpiles, including diesel and heating oil, fell for a third consecutive week.
Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, observed that sporadic Middle East attacks supported oil prices. He noted the market requires a major escalation for fresh momentum. Kikukawa anticipates a gradual upward trend, citing uncertainties over peace talks and tensions involving the UAE, Oman, and Iran.
For Asian economies, sustained higher oil prices translate into increased import bills and inflationary pressures. Businesses across sectors, from manufacturing to logistics, face elevated operational costs. Investors will closely monitor regional diplomatic developments and their potential effects on global energy supply chains.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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