KEY POINTS
- Brent rose 0.49 percent to $91.47 and WTI 0.53 percent to $85.39, both three-week highs.
- Low confidence in Hormuz passage and near-total shipping disruption kept a geopolitical risk premium in prices.
- Iraq approved new crude export mechanisms from September 1, while traders awaited US inventory data.
Oil prices climbed to a three-week high on Wednesday as uncertainty over shipping through the Strait of Hormuz and continuing supply disruptions kept the market firm.
Brent crude rose 45 cents, or 0.49 percent, to $91.47 a barrel by 0754 GMT, its highest since July 30. Meanwhile, US West Texas Intermediate gained 45 cents, or 0.53 percent, to $85.39, its strongest since July 31.
Risk premium clings to prices
According to KCM analyst Tim Waterer, confidence in safe passage through Hormuz remains low, and shipping volumes still run well below normal, which keeps a geopolitical risk premium baked into the oil prices. Moreover, Pepperstone strategist Ahmad Assiri said commercial traffic faces near-total disruption while the two sides argue over the rules for maritime passage. He added that Brent above $91 shows traders pricing in more risk, and that prices could climb back toward triple digits.
Still, the diplomatic picture stayed tense. Trump said on Tuesday that Washington held no talks with Iran and called the strait open, yet Tehran insisted the waterway stayed shut. Consequently, a temporary ceasefire that expired on Monday left the standoff unresolved, and a senior Iranian official cited the diplomatic stalemate, though neither side reported strikes on Tuesday.
Supply moves and stock data in focus
Furthermore, the strait’s importance keeps markets on edge, since it carried about a fifth of global oil and liquefied natural gas before the US-Israeli war on Iran began in late February. Shipping data on Wednesday showed traffic slowing further as most owners avoided the route.
Meanwhile, Iraq offered a partial offset. Its cabinet approved new mechanisms to export crude through international and local firms and multiple outlets, with three-month contracts starting September 1. In addition, traders eyed US stockpiles, after industry data showed crude and distillate fell but gasoline rose last week, ahead of official figures that analysts expect to show a 600,000-barrel crude draw.
