Oil prices climbed to three-week highs on Thursday, driven by concerns that the impasse in the US-Israeli war on Iran will continue to disrupt supply from the key Middle Eastern producing region.
Brent crude futures for October delivery rose $2.44, or 2.7%, to $94.06 a barrel by 0958 GMT, while US West Texas Intermediate crude futures for September added $1.84 to $87.67 a barrel. The more-active October WTI contract was up $2.41, or 2.9%, to $86.80.
Both Brent and WTI benchmarks hit their highest since July 24 and gained for a fifth straight session. The September WTI contract expires later on Thursday.
“Tensions in the Middle East remain high, leaving room for further supply disruptions,” said UBS analyst Giovanni Staunovo. “Lower oil exports from the Middle East are once again tightening the oil market.”
The UAE’s decision to suspend all financial and economic transactions with Iran until further notice has refocused the spotlight on fraught ties between the major Gulf Arab oil producer and Iran.
“Oil prices remained elevated as the market is supported by sporadic attacks in the Middle East but lacks fresh momentum without a major escalation,” said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment.
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“The market is likely to maintain a gradual upward trend given uncertainty over peace talks and tensions involving the United Arab Emirates, Oman and Iran,” he added.
On Tuesday, US President Donald Trump said no talks were taking place with Iran and that the Strait of Hormuz was open. Iran, however, said the waterway remained shut.
Trump on Wednesday warned of economic consequences against any country that provided “any type of lifeline to Iran”.
Shipping traffic through the strait on Wednesday was unchanged from the day before as discussions to end the conflict remained deadlocked, according to the latest shipping data.
Before the war that began with US and Israeli strikes on Iran on February 28, shipments equal to about one-fifth of global consumption moved through the waterway. Current flows are far below pre-war levels.
The war has also impacted the supply of refined fuels and drawn down inventories with less crude available to refiners.
US stockpiles of distillate fuel, including diesel and heating oil, fell last week for a third week, the Energy Information Administration said on Wednesday. However, crude inventories unexpectedly rose by 4.4 million barrels.
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