Oil Prices Surge 1% Amid Rising Concerns Over US-Iran Strikes and Potential Supply Disruptions
Oil prices surged on Wednesday, with Brent crude nearing $96 a barrel amid escalating tensions between the US and Iran. Brent crude futures increased by 87 cents, or 0.92%, reaching $95.52 per barrel, while US West Texas Intermediate crude rose by 80 cents, or 0.89%, to $91.02. This uptick followed a significant rise of over $4 in both benchmarks on Tuesday, marking Brent’s largest daily gain since July 24 and WTI’s strongest increase since July 23.
Supply Concerns Amid Military Escalation
The Strait of Hormuz, a critical passage for global oil shipments, is at the center of rising concerns. Approximately one-fifth of the world’s oil consumption transits through this waterway. Recent military actions have effectively shut down commercial shipping in the strait, with attacks on two tankers prompting traders to seek alternative crude supplies. The latest military exchanges between the US and Iran have further heightened fears of supply disruptions.
The US conducted airstrikes against Iranian targets following attempted attacks by Iran’s Islamic Revolutionary Guard Corps (IRGC) on commercial shipping and US personnel in the region. In retaliation, Iran launched attacks on US military positions, with the IRGC warning that these strikes would further restrict traffic through the Strait of Hormuz. Iranian state media reported a large-scale drone attack on a US base in Bahrain, while Jordan intercepted several ballistic missiles aimed at its territory.
Impact of US Inventory Data
In addition to geopolitical tensions, US inventory data has provided further support for rising crude prices. Reports indicate that oil stocks in the US fell by 2.6 million barrels for the week ending August 28. Distillate inventories, which include diesel and heating oil, also saw a decline of 265,000 barrels, according to sources citing American Petroleum Institute data.
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