Hormuz Tensions Send Oil Prices Soaring Above $89 as US Claims Control
Oil prices continued their rally on Wednesday, with Brent crude trading above $89 a barrel and West Texas Intermediate near $84, as traders weighed the escalating war of words over control of the Strait of Hormuz against signs that tanker transits through the waterway are shrinking.
President Trump claimed that the US holds 'total control' over the strait, saying the US Navy blockade is a 'wall of steel' that Iran cannot breach. However, Iran's Persian Gulf Strait Authority rejected this assertion, stating the strait remains blocked until its conditions are met.
Data from tracking companies shows tanker transits fell to a one-week low of around eight vessels a day, compared with roughly 130 a day before the conflict began. This divergence between Washington's rhetoric and physical shipping data is likely to keep a geopolitical risk premium embedded in oil prices.
On the inflation front, July's Consumer Price Index came in line with expectations, with headline inflation at 3.4% annually and core inflation at 2.5%. While this has eased near-term pressure for a September rate hike, three Federal Reserve policymakers dissented in favor of tightening at the July meeting.