-- Crude oil futures advanced in midday trading on Wednesday, buoyed by reports of gunfire attacks on container vessels in the Strait of Hormuz and a sharper-than-expected decline in US fuel inventories.
Front-month West Texas Intermediate crude futures jumped by 3.57% to $92.87 per barrel, while Brent futures rose 3.22% to $101.65/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 million barrels and distillate stockpiles by 3.4 mmbbls to 108.1 mmbbls.
"Higher oil and fuel prices have already triggered around 5 million b/d of demand destruction," Saxo Bank strategists said, citing Vitol.
The analysts said that market stress remains evident in the refined products space, where shortages of diesel, jet fuel, and petrochemical feedstocks continue to underpin prices.
The US and Iran remain deadlocked on several key issues, including Tehran's nuclear capabilities and Israel's war with Hezbollah in Lebanon.
Soojin Kim, a research analyst at MUFG, said that with key disputes unresolved, including nuclear concerns and regional conflicts, the oil market remains highly sensitive to geopolitical developments and is supported by ongoing supply disruptions.
Iran's Revolutionary Guards said its naval forces stopped two ships attempting to cross the Hormuz on Wednesday and directed them to Iranian territorial waters. MarineTraffic said the two vessels are both operated by MSC.
The attacks come days after US forces stopped and boarded a sanctioned oil tanker, after seizing a cargo ship over the weekend, and said it has directed 29 vessels to return to port as Washington steps up its campaign to disrupt Iran's shipping network.
The UK Maritime Trade Operations said that at least three vessels were targeted by gunfire in the Strait, as the Revolutionary Guards warned that any disruption to order and safety in the strategic waterway would be considered a "red line."
Meanwhile, Trump said in a social media post that if the US lifted its blockade to open the Strait, there could never be a deal with Iran.
The US President said that a ceasefire would stay in effect until a "seriously fractured" Iranian leadership can come up with a unified proposal for a permanent resolution. However, Iran has accused the US of breaching its commitments under a 10-point framework that it offered at the start of a fragile ceasefire.