Oil edges up on uncertainty over exports through Hormuz

On August 19, oil prices experienced a slight increase as market participants grappled with uncertainty surrounding the Strait of Hormuz. Brent crude futures rose by 26 cents, or 0.29%, to $91.28, while US West Texas Intermediate crude futures jumped by 37 cents to $85.31 per barrel. The price surge occurred as conflicting statements from Tehran and Washington left investors unsure about the status of the critical waterway.

The previous day, U.S. President Donald Trump announced that no talks with Iran were taking place and emphasized that the Strait of Hormuz remained open. However, Iran's assertion that the waterway remained closed was contradicted by a senior Iranian official, who stated that his country was shifting to a "fully offensive" military posture in response to the diplomatic stalemate. Despite the tensions, there were no reports of fresh strikes between the two nations on August 18.

In an attempt to circumvent the Strait of Hormuz, Iraq's cabinet approved mechanisms for exporting crude through specialized international and local companies via multiple export outlets, starting from September 1. Two Chinese shipping giants have also halted shipments through the Strait due to the ongoing conflict, opting instead to collect oil cargoes outside the Gulf region, according to industry executives, tanker trackers, and a ship broker.

Meanwhile, crude oil and distillate inventories in the United States declined last week, while gasoline stocks rose, according to market sources citing data from the American Petroleum Institute. Official inventory figures from the U.S. Energy Information Administration are expected to be released at 10:30 AM ET (10:30 PM Singapore), with analysts polled by Reuters anticipating a decrease in crude stocks by approximately 600,000 barrels in the week ending August 14.