Crude oil futures hovered near a one-month high on Wednesday as President Donald Trump abandoned a proposed 20% transit fee for the Strait of Hormuz.
Front-month Murban crude futures dipped over 3% to $79.42 per barrel, while Brent futures edged up 0.4% to $85.06/bbl.
"Oil prices have risen approximately 13% over the past two sessions on the escalation, though they remain below wartime peaks. Trump subsequently dropped the 20% Hormuz transit levy plan, providing some relief," Saxo Bank analysts said.
In a significant policy shift, US President Donald Trump said that he is abandoning the proposed 20% "reimbursement" fee for vessels transiting the Strait of Hormuz.
As part of a long-term strategic pivot to bypass the bottleneck, the US is supporting efforts by Iraq and Syria to restore the historic Kirkuk-Baniyas pipeline, a project designed to reduce Iran's influence over global energy flows.
However, the supply situation remains fragile, with tanker traffic through the Strait of Hormuz far below normal levels due to safety concerns and a reinstated US naval blockade of Iranian ports.
The escalation follows a series of direct attacks on commercial vessels in the Strait of Hormuz, including projectiles that struck two Emirati-linked tankers, resulting in one fatality and multiple injuries.
Regional tensions are further compounded by emerging risks in the Red Sea, where Houthi-led strikes on Saudi territory have sparked fears of a dual-chokepoint crisis.
On the supply side, data from the American Petroleum Institute revealed Tuesday that US crude oil inventories dropped by 564,000 barrels in the week ended July 14.
Traders are now awaiting official US energy inventory data, which is expected to provide further clarity on the global supply and demand picture.