Oil prices hit a three-week high on Wednesday as uncertainty over shipping through the Strait of Hormuz and ongoing supply disruptions supported the market.
Brent crude futures climbed 45 cents, or 0.49%, to $91.47 by 07:54 GMT, while US West Texas Intermediate crude futures were up 45 cents, or 0.53%, to $85.39 a barrel.
Brent crude hit its highest level since July 30 and WTI reached its highest since July 31.
“Confidence in safe passage remains low, with shipping volumes still running well below normal levels. That persistent uncertainty continues to keep a geopolitical risk premium embedded in the oil price,” KCM chief market analyst Tim Waterer said.
US President Donald Trump said on Tuesday no talks were taking place with Iran and that the Strait of Hormuz was open, contradicting Iran, which said the waterway remained shut.
A temporary ceasefire agreement expired on Monday and a senior Iranian official told Reuters that his country was moving to a due to the diplomatic stalemate, though there were no reports of strikes by either side on Tuesday.
The Strait of Hormuz carried about one-fifth of global oil and liquefied natural gas supplies before the US-Israeli war on Iran began at the end of February. Its disruption remains a central concern for energy markets.
“Commercial shipping through Hormuz continues to face near full disruption while disagreements persist over the conditions governing maritime traffic,” said Ahmad Assiri, research strategist at brokerage Pepperstone.
Shipping through Hormuz slowed, data showed on Wednesday, as most shipowners avoided the waterway because of the uncertainty.
Iraq’s cabinet approved mechanisms for exporting Iraqi crude through specialised international and local companies and via multiple export outlets, the government said on Tuesday.
The contracts under the new mechanism will run for three months starting September 1, according to a statement issued after the cabinet meeting.
Brent’s move above $91 a barrel suggests traders are pricing in a higher risk premium, with prices potentially returning to three-digit levels, Assiri from Pepperstone added.
US crude oil and distillate inventories fell while gasoline stocks rose last week, market sources said, citing data from the American Petroleum Institute.
Official inventory numbers from the US Energy Information Administration are due at 10:30am ET (14:30GMT). Analysts polled by Reuters expect crude stocks to have fallen by about 600,000 barrels in the week ended August 14.
