Oil hits three-week high as Hormuz impasse chokes supply

Oil prices climbed for a fifth consecutive session on Thursday, reaching their highest levels in nearly a month, as the ongoing impasse in the US-Iran war continued to choke supply through the Strait of Hormuz and stoke fears of a prolonged disruption to global energy markets.

Prices Edge Higher as Strait Remains Contested

Brent crude futures for October delivery rose 26 cents, or 0.28%, to $91.87 a barrel in early Asian trading, while US West Texas Intermediate crude futures for September added 17 cents to $86 a barrel. Both benchmarks settled Wednesday at their highest since July 24.tribune+1

Shipping traffic through the Strait of Hormuz remained at depressed levels, with commodity vessel transits totalling just nine on Wednesday, unchanged from Tuesday, according to shiptracking data from Kpler. Before the war that began on February 28, shipments equal to roughly one-fifth of global oil consumption moved through the waterway, with current flows far below pre-war levels.freemalaysiatoday+1

The situation was further complicated by conflicting claims from the two sides. On Tuesday, President Donald Trump said no talks were taking place with Iran and insisted the strait was open. Iran maintained the waterway remained shut.klsescreener+2

UAE Sanctions and Regional Tensions Add Pressure

The United Arab Emirates' decision to suspend all financial and economic transactions with Iran until further notice has added another layer of tension, refocusing attention on the fraught ties between the major Gulf Arab oil producer and Tehran.tribune+1

"Oil prices remained elevated as the market is supported by sporadic attacks in the Middle East but lacks fresh momentum without a major escalation," said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment. "The market is likely to maintain a gradual upward trend given uncertainty over peace talks and tensions involving the United Arab Emirates, Oman and Iran."klsescreener+1

Traffic also slowed at the Bab el-Mandeb strait, the other major Middle Eastern waterway, where commodity vessel transits fell to 27 on Wednesday from 32 the day before.freemalaysiatoday

US Inventories Send Mixed Signals

US crude inventories rose by 4.4 million barrels in the week ended August 14, far exceeding expectations of a 600,000-barrel draw, the Energy Information Administration reported Wednesday. However, distillate fuel stockpiles, including diesel and heating oil, fell for a third consecutive week, underscoring how the war has constrained refinery operations and drawn down supplies of refined products.tribune+1