Oil & Energy
US Oil Update: Crude Nears 3% as Strait of Hormuz Risks Support Prices
Crude futures hovered near 3% in after-hours trading on Wednesday as escalating US-Iran hostilities stoked fears of disruptions across key Middle Eastern energy supply routes, while threats to shipping by Yemen's Houthis further boosted prices.Front-month West Texas Intermediate crude futures rose 2.54% to $86.48 per barrel, while Brent futures climbed by 2.96% to $93.70/bbl.The US Central Command responded to a claim by Iran's military forces that it controlled the Strait of Hormuz, saying the "international waterway remains open for transit.""Iran does not control the Strait of Hormuz," US Centcom posted on X on Wednesday.Iran's Islamic Revolutionary Guard Corps issued a statement that said that entry and exit through the Hormuz remained "clear and under our definite control", while warning that alternative routes were "unsafe and dangerous," according to the semi-official Tasnim News Agency associated with the IRGC.Centcom reiterated its stance that the strait remained open to shipping. "The international waterway remains open for transit regardless of IRGC threats and attacks. Commercial vessels continue to use the strait with US military support," Centcom posted.It noted that US military forces helped over 900 ships transit the strait since early May. As of Wednesday, Centcom said it redirected nine commercial vessels and disabled one.Soojin Kim, research analyst at MUFG, said the widening geographic scope of supply disruptions suggests oil prices are being driven by global transportation risks, leaving the market vulnerable to further upside if geopolitical tensions persist.US commercial crude oil inventories increased by 2 million barrels to 411.7 mmbbls in the week ended July 17, the Energy Information Administration said in its weekly report on Wednesday.Crude inventories are now about 6% below the five-year average for this time of year, the EIA said.President Trump on Wednesday vowed to blow up an Iranian bridge or power plant, including those in the country's capital city of Tehran, every time Iran shoots at a vessel in the Strait of Hormuz."From this point forward, any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz, whether it be by missile, rocket, drone, or any other device or weapon, the United States will bomb and destroy one bridge or power plant," Trump said in a post on Truth Social.Saxo Bank strategists said the US-Iran conflict entered an 11th day, with Washington and Tehran exchanging strikes and Trump downplaying the prospect of near-term talks, while vowing to respond if the Houthis disrupt Red Sea shipping.On Wednesday, US Secretary of State Marco Rubio also said that Iran was not serious about reaching a deal to end the fighting, while vowing to continue to protect shipping via the Strait.Speaking at the ASEAN Foreign Ministers' meeting in the Philippines, Rubio said the US remains willing to negotiate an end to the Middle East conflict.The US remains open and willing to engage in positive, constructive negotiations and talks so long as the commitments that are made are kept, Rubio said.US Central Command said that American forces carried out the eleventh consecutive night of strikes against Iran on Tuesday, targeting Iranian military operations centers, maritime capabilities, aircraft hangars, drone storage facilities, and military logistics infrastructure.Commercial shipping activity across key Middle East waterways remains subdued, with 22 confirmed transits through the Hormuz and 73 through Bab el Mandeb, as operators continue to exercise caution amid heightened regional security risks.Confirmed maritime attacks continue around the Strait of Hormuz, Kpler said in a post on X, noting that this reinforced concerns that uncertainty across both regional chokepoints could reshape routing decisions.This could also increase freight costs and sustain higher geopolitical risk premiums for energy markets, Kpler said.