Oil settles 1% higher, as US-Iran strikes threaten supplies
Session highs for both oil benchmarks are at their peaks since Jul 24
Brent crude prices rose by 1% on Wednesday as US-Iran military strikes intensified, causing supply concerns. This marks the highest session highs for both benchmarks since July 24, following a period of relative calm. US and Iranian forces exchanged fire, with the US targeting Iranian radar and mine-laying capabilities, while Iran retaliated against US positions.
The war began with US-Israeli strikes on Iranian targets in late February, and Iran has since blocked shipping traffic in the Strait of Hormuz, a vital waterway carrying about a fifth of global oil and LNG. Four vessels transited the strait on Wednesday, below the 10-day average, while Iran added more non-compliant ships subject to fines for attempting to pass through.
Despite US claims of 17 million barrels of oil transiting the strait in a single day, the market remains cautious about potential supply disruptions. OPEC+ is expected to keep its oil output unchanged for October, as the producer group finalizes production cuts and focuses on 2027 quota negotiations. Meanwhile, Russia launched missile and drone strikes on Ukrainian energy infrastructure, while US crude oil inventories decreased by 4.5 million barrels last week.
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