Oil prices rose on Wednesday amid growing concerns over potential supply disruptions in the Middle East. The Strait of Hormuz saw heightened tensions as Iran's Revolutionary Guards reported that naval mines had halted three tankers attempting unauthorized passage. Two of these tankers were reportedly set ablaze, according to a statement from the IRGC. Meanwhile, Yemen's Houthi militants claimed responsibility for strikes on Saudi Aramco facilities and airports, further escalating regional anxieties.
Brent crude futures climbed 1.22% to $110.13 a barrel, while U.S. West Texas Intermediate crude increased 1.11% to $98.92 a barrel. The escalating tensions have also driven up global oil shipping costs, with the average crude freight rate surging above $20 per barrel, compared to just $3 a year earlier. Goldman Sachs attributed much of this increase to war-risk premiums and ship-to-ship transfers outside the Persian Gulf.
Goldman Sachs warned that elevated shipping costs could widen price differences between crude grades, squeeze refiners' profit margins, and ultimately push up refined fuel prices. The investment bank highlighted that high freight costs have particularly impacted Asian refineries' net margins, potentially reducing refined product output and raising global prices for these products.