Oil Prices Soar as US-Iran Deal Hopes Fade and Middle East Tensions Rise
Oil prices surged on Wednesday morning as concerns about supply disruptions in the Middle East intensified. The price of Brent futures rose by $0.72, or 0.81%, to $89.63 a barrel, while US West Texas Intermediate (WTI) crude climbed $0.71, or 0.85%, to $83.91.
The increase in oil prices comes as doubts about the US-Iran peace deal continue to grow. Iran's top security official, Mohsen Rezaei, stated that the Strait of Hormuz shipping route would remain closed unless the US accepted Iran's conditions for ending the war, including the release of frozen Iranian assets and an end to other conflicts across the region.
The Strait of Hormuz is a vital shipping route through which over 125 vessels pass daily. However, traffic through the waterway dropped to six vessels on Monday compared to a 10-day average of about 11. The decline in oil prices was also driven by attacks on two ships, one in the Strait of Hormuz and another in the Bab el-Mandeb Strait.
On the supply front, market sources citing American Petroleum Institute data reported that US crude inventories rose sharply in the week ended August 7. The build far exceeded expectations, which could ease market concerns about supply tightness. Official numbers from the EIA are due at 10:30 a.m. ET (1430 GMT) on Wednesday.