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US Oil Update: Oil Hovers Near 3-Week High as Supply Concerns Loom

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Crude oil benchmarks edged up on Wednesday to hit their highest in nearly three-weeks driven by an escalating US-Iran geopolitical standoff, and ongoing shipping disruption in the Strait of Hormuz.

Front-month West Texas Intermediate crude futures were up by 0.3% to $85.17 per barrel, while Brent futures added 0.2% to $91.19/bbl. Both contracts hovered near their highest since late July.

"Oil prices rose for a fourth consecutive session on Wednesday, supported by ongoing uncertainty surrounding the US-Iran standoff and the potential implications for shipping through the Strait of Hormuz," ING analysts noted.

Adding to geopolitical friction, Ebrahim Rezaei, a member of Iran's parliament, reportedly outlined a proposed security plan, stating that the management, monitoring, and inspection of the waterway should lie exclusively with Iran and its armed forces.

Compounding supply pressures, Ukrainian drones struck the Ufa oil refinery in Russia's Bashkortostan republic, sparking a fire and damaging pipework at a facility already undergoing maintenance.

Bloomberg reported that Saudi Aramco has assured at least three European refiners that it will fulfil contractual crude deliveries next month, despite mounting logistical bottlenecks in the Red Sea and the closure of the Strait of Hormuz.

On the supply side, data from the American Petroleum Institute revealed Tuesday that US crude oil inventories dropped by 328,000 barrels in the week ended Aug. 14.

The oil market now awaits the US Energy Information Administration's petroleum inventory report, scheduled for release on Wednesday.

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