Rise in Oil Prices Amid Continued Uncertainty Over Middle East Supplies

SadaNews: Oil prices rose on Wednesday amid ongoing uncertainty regarding crude supplies from the Middle East, the main production region, as the Strait of Hormuz remains closed.

Brent crude futures rose by 0.8% to $95.56 a barrel, following a decline of 4.6% in the previous session. 

U.S. West Texas Intermediate crude increased by 0.2% to $91.52, after a sharp loss of 7.9% in the last session.

U.S. President Donald Trump stated yesterday that talks aimed at ending the war between the U.S., Israel, and Iran may resume in Pakistan over the next couple of days, following the collapse of negotiations earlier in the week, which led Washington to impose a blockade on Iranian ports.

These developments contributed to an increase in optimism about the possibility of reaching a settlement that would lead to the resumption of crude oil and fuel flows.

Souvro Sarkar, head of the Energy Sector Team at DBS Bank, clarified that markets see the worst phases of the U.S.-Iran conflict as having passed, with expectations for new rounds of peace talks in the coming days, adding that current hopes exceed actual developments on the ground.

He noted that spot oil prices are still trading at large premiums compared to futures contracts, according to Reuters.

The conflict has led to the closure of the Strait of Hormuz, a vital waterway for transporting crude oil and refined products from the Gulf to global markets, especially in Asia and Europe.

Despite a two-week ceasefire, uncertainty still surrounds navigation through the strait, with sources reporting that the volume of transit represents only a limited portion of the approximately 130 vessels that used to pass daily before the outbreak of war.

In this context, a U.S. official stated that an American destroyer prevented two oil tankers from leaving Iran yesterday.

The market is expected to face additional supply constraints, after U.S. officials reported that the United States will not renew a 30-day exemption from sanctions imposed on Iranian oil transported by sea, which expires this week, and a similar exemption concerning Russian oil is also set to end at the beginning of the week.

Markets are awaiting the official U.S. oil inventory data from the Energy Information Administration at 14:30 GMT later today.

A Reuters survey indicated a slight increase in U.S. crude oil inventories during the past week, while a decline in distillate and gasoline inventories is likely.

Additionally, sources familiar with the American Petroleum Institute data indicated that U.S. crude inventories have risen for the third consecutive week.