Hormuz Tensions Send Oil Prices Soaring Again
Oil prices rose for a fourth consecutive day on August 19 as concerns over supply uncertainty continued to weigh on investors. The Strait of Hormuz, a critical waterway through which oil exports pass, remains a point of contention between Iran and the US.
The Brent crude futures climbed 26 cents, or 0.29%, to $91.28 per barrel, while US West Texas Intermediate crude futures rose by 37 cents to $85.31 per barrel. These prices represent the highest levels since July 24, when hopes of peace between the US and Iran were still alive.
US President Donald Trump stated on August 18 that no talks with Iran are taking place and insisted that the Strait of Hormuz is open to shipping, contradicting Iran's assertion that it remains closed. The temporary ceasefire agreement had expired on August 17, and a senior Iranian official revealed that his country was moving to a 'fully offensive' military posture due to the diplomatic stalemate.
As tensions rise, Iraq has approved mechanisms for exporting crude oil through international and local companies via multiple export outlets. Two Chinese shipping giants have halted sending oil tankers through the Strait of Hormuz and Bab al-Mandeb strait, instead collecting oil cargoes outside the Gulf. In the US, crude oil and distillate inventories fell, while gasoline stocks rose last week.