Middle East Tensions Fuel Four-Week High in Crude Oil Prices
Crude oil prices have surged to a four-week high following heightened tensions in the Middle East. The Strait of Hormuz remains closed, limiting crude supplies from the region and putting upward pressure on oil prices.
The lack of a clear path to resolving the crisis has kept the Strait of Hormuz shut, with US Energy Secretary Chris Wright stating that the US is playing the long game with Iran, implying no plans for de-escalation. This has dampened prospects for ending hostilities in the Middle East and reopening the Strait.
Israel's attacks on Iranian-backed groups in Lebanon have also contributed to the heightened tensions, as have recent attacks by the Yemen-based Houthis on ships in the Red Sea and projectiles hitting vessels in the Strait of Hormuz. Despite these incidents, many Gulf countries have successfully transited crude shipments through the strait.
The US Energy Information Administration (EIA) reported a larger-than-expected build in crude inventories, but this was offset by a larger-than-anticipated drawdown in distillate stockpiles and a fall in crude supplies at Cushing, the delivery point of WTI futures. The EIA also noted that US crude oil production rose 0.2% week-over-week to 13.83 million bpd.