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Oil Extends Rally for Fourth Session as Iran Conflict Keeps Strait of Hormuz Shut

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Oil prices edged higher early Thursday, rising for a fourth straight session as escalating violence between the U.S. and Iran kept the Strait of Hormuz closed.

West Texas Intermediate crude oil for August delivery was last seen up 0.5% to $79.96 per barrel, the highest since June 15, while September Brent oil was up 0.1% to $85.06.

U.S. forces continued to strike Iran as they sought to eliminate the country's ability to threaten vessels passing through the Strait of Hormuz, a key chokepoint that carried about 20% of global oil supplies before the war began on Feb. 28.

The Guardian reported the US launched strikes on the port city of Bandar Abbas as well as targets near Tehran and a tanker ignoring the US blockade of Iranian ports, while Iran responded with attacks on Bahrain, Kuwait and Jordan.

The fresh fighting is keeping ships trapped in the Persian Gulf, leaving Asian nations struggling for supply. Just 10 ships moved through the Strait of Hormuz in the past day, according to hormuzstraitmonitor.com, 17% of normal traffic through the waterway.

The escalating fighting is keeping supply tight, pushing price up 11% since the fighting restarted on the weekend amid fears of rising inflation and slower growth.

"Crude oil steadied after a three-day rally, with Brent trading around USD 85, suggesting the recent wave of short covering that helped fuel the advance may have largely run its course for now. Nevertheless, escalating Middle East tensions continue to raise concerns about energy flows from the region, prompting the IEA to warn that a prolonged disruption could have a meaningful impact on the global economy," Saxo Bank wrote.

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