West Texas Intermediate (WTI) crude oil closed higher on Thursday, rising off a four-month low after reports a cargo ship was attacked near Oman, raising safety worries that could again keep ships trapped in the Persian Gulf.
WTI crude oil for August delivery close up 2.3% to settle at US$71.92 per barrel after earlier touching US$68.90, August Brent oil was last seen up 2.1% to US$72.28.
UK Maritime Trade Operations on Thursday said the International Maritime Organization is suspending traffic through the Strait of Hormuz following reports a cargo vessel in the Strait was attacked. There was no indication when the Strait will be reopened.
U.S. Energy Secretary Chris Wright on Wednesday told a conference that ships carrying 20-million barrels of oil had transited the Strait since the Iran and the U.S. declared a 60-day ceasefire last week, raising supply form Gulf producers, including Iran, which has been freed from the U.S. sanctions.
The eventual return of Gulf supply is expected to normalize markets after the war produced the largest-ever oil supply shock and depleted global inventories, returning the focus to waning demand amid the energy transition.
"The reopening of the Strait of Hormuz has created a short-term wave of supply, pushing prices back toward levels that may prove difficult to sustain once the backlog of stranded barrels has cleared and releases from strategic reserves are scaled back. Longer term, however, slower demand growth driven by electrification and fuel switching may continue to cap upside potential," Saxo Bank noted.