-- Crude oil futures advanced in midday trading on Thursday after President Trump threatened to attack ships laying mines in the Strait of Hormuz, stoking concerns over potential disruption to global oil flows through the key shipping chokepoint.
Front-month West Texas Intermediate crude futures climbed by 4.09% to $96.76 per barrel, while Brent futures were up 3.70% to $105.68/bbl.
US crude stockpiles rose by 1.9 million barrels to 465.7 mmbbls in the week ended April 17, the Energy Information Administration said in its weekly report on Wednesday. Crude inventories are now about 3% above the five-year average for this time of year, the EIA said.
The agency said that US gasoline stocks fell by 4.6 mmbbls to 228.4 mmbbls and distillate stockpiles by 3.4 mmbbls to 108.1 mmbbls.
ING strategists said that, though the US market has been relatively shielded from Middle East supply disruptions, prolonged instability is tightening conditions as global buyers increasingly turn to US supplies.
Meanwhile, the US and Iran seized commercial ships in the Strait this week, as the two sides compete for control of the strategic waterway despite the extension of a ceasefire after a request from Pakistan.
On Thursday, the US Department of War said its forces intercepted a sanctioned tanker in the Indian Ocean that was carrying oil from Iran. The interception comes a day after the US blocked the Iranian tankers M/V Hero II, M/V Hedy and M/V Dorena.
"We will continue global maritime enforcement to disrupt illicit networks and interdict vessels providing material support to Iran, wherever they operate," the Department said.
Trump said on Thursday that he had ordered the US Navy to "shoot and kill" boats laying mines in the Hormuz, while claiming that Washington now has "total control" over the passage and directed the military to act without hesitation against Iranian small boats.
Iranian officials, on the other hand, have accused the US of breaching its commitments under a 10-point framework that Iran offered at the start of a fragile ceasefire, with parliament speaker Mohammad Baqer Qalibaf saying a full ceasefire will only make sense if the US lifts its blockade.
The deputy speaker of Iran's parliament, Hamidreza Haji Babaei, also said that the first tranche of tolls collected from ships passing the Hormuz has been deposited into the Iranian central bank's account, according to local media.
Soojin Kim, research analyst at MUFG, said the conflict has sharply reduced energy flows from the Arabian Gulf, driving a rally in oil prices, while falling US inventories and record exports highlight growing reliance on American supplies to offset shortages.