West Texas Intermediate (WTI) crude oil rose for a third day on Wednesday as the ceasefire between Iran and the United States appeared to fracture as the two sides exchanged strikes, lowering hopes for a deal to end the war and reopen the Strait of Hormuz.
WTI oil for July delivery closed up US$2.26 to settle at US$96.02 per barrel,, while August Brent oil was last seen up US$1.88 to US$97.88.
The Wall Street Journal reported Iran launched attacks on Kuwait and Bahrain and the United States attacked Iran's military ground control stations on Qeshm Island and struck at an empty oil tanker attempting to run its blockade of Iranian ports and load oil at Iran's Kharg Island.
The strikes are lowering hopes for an end to the war that is now in its fourth month. The closure of the Strait of Hormuz since the war began on Feb. 28 has shut in most exports from the Persian Gulf nations that supplied a fifth of daily oil demand. While U.S. President Trump has claimed a deal to end the war is near, Iran on Monday said it is refusing further talks until Israel ends its attacks ol Lebanon.
"Crude oil is trading higher for a third consecutive session, with Brent pushing above USD 97 as market pessimism once again grows over the prospects of a US-Iran deal that could pave the way for a reopening of the Strait of Hormuz. The latest escalation saw US forces intercept Iranian missiles and drones before striking an Iranian command center in response. For now, the risk premium continues to be partly offset by President Trump's repeated insistence that an interim agreement remains within reach," Saxo Bank noted.
Dwindling U.S. inventories are also supporting prices. In its weekly survey, the Energy Information Administration reported U.S. commercial oil inventories fell by eight-million barrels last week, double the consensus estimate among analysts polled by Reuters for a four-million barrel drop.