Oil hits three-week high on uncertainty over Hormuz

Oil prices surged to a three-week high on Wednesday, driven by uncertainty surrounding shipping operations through the Strait of Hormuz and ongoing supply disruptions. Brent crude futures increased by 45 cents, or 0.49%, reaching $91.47 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by 45 cents, or 0.53%, to $85.39 a barrel.

Brent crude had not been this high since July 30, and WTI had not been this high since July 31. Market analysts noted that low confidence in safe passage and persistently low shipping volumes continued to embed a geopolitical risk premium in oil prices. U.S. President Donald Trump confirmed on Tuesday that no discussions were taking place with Iran and that the Strait of Hormuz remained open, a claim which contradicted Iran's assertions that the waterway remained closed.

The temporary ceasefire agreement expired on Monday, and a senior Iranian official stated that Iran was shifting to a fully offensive military stance due to the diplomatic stalemate, though there were no immediate reports of strikes by either side. The Strait of Hormuz typically carries about one-fifth of global oil and liquefied natural gas supplies before the U.S.-Israeli conflict with Iran began at the end of February.

Disruptions in the Strait of Hormuz remain a significant concern for energy markets. Commercial shipping through the Strait of Hormuz remains near a full disruption as most shipowners avoid the waterway due to uncertainty. Iraq's cabinet approved mechanisms for exporting Iraqi crude through specialized international and local companies via multiple export outlets, starting from September 1.

Brent's move above $91 a barrel indicates that traders are pricing in a higher risk premium, potentially leading prices to return to three-digit levels. U.S. crude oil and distillate inventories declined, while gasoline stocks rose last week, according to data from the American Petroleum Institute.