Oil crept higher as Iran claimed fresh strikes on US bases, while Saudi Arabia’s smaller-than-expected hike to its flagship crude prices offset some concerns about market tightness.
West Texas Intermediate futures swung between gains and losses to settle near $91 a barrel. Brent edged marginally lower to close near $95.50, snapping a three-day winning streak.
The return to a blow-for-blow exchange of strikes between the US and Iran risks reversing a recent recovery in barrels transiting the Strait of Hormuz, as the war in the Persian Gulf shows little sign that diplomacy can achieve a lasting resolution. Iran’s military said on Thursday it targeted US bases in Kuwait and the UAE, the state-run Islamic Republic News Agency reported. Kuwait said it responded to missile and drone threats; the UAE hasn’t announced any incidents.
Oil eased after Saudi Arabia kept the price of its flagship crude unchanged for next month, signaling less market tightness than some investors had anticipated.
“Renewed hostilities between the US and Iran continues to highlight the fragility of any non-concrete deal or short-term de-escalation,” said Ryan McKay, senior commodity strategist at TD Securities. “Iran is not backing away from controlling the Strait, which ultimately keeps probability of escalation high as the US facilitates ship passages through the Omani route.”
Risks of the conflict widening also rose. Israel indicated that it was prepared to return to the fighting if necessary and that an Iranian attack on the Jewish state would free it from any existing restrictions.
“We would strike all national, military and civilian infrastructure – including energy infrastructure – and return Iran deep into the Stone Age,” Defense Minister Israel Katz warned.
Earlier, US President Donald Trump, when asked how long a renewed US bombing campaign could continue, said “I don’t think too long,” while adding that “we’re prepared to do another one.” Renewed US strikes followed weeks of relative calm, with Iran hitting back by targeting American bases across the Middle East.
Traders have returned their focus to tracking the flow of oil from the Persian Gulf as conflicting assessments obscure the scale of traffic, with tankers continuing to transit the chokepoint with their transponders off. Prices shrugged off comments from Trump that about 18 million barrels a day are moving through the vital strait, only just below prewar levels, the US president said in a social media post. He later added that up to 40 boats are exiting Hormuz nightly.
Kpler, Vortexa and Tankertrackers.com – firms that monitor seaborne oil flows – put the average shipment rate at a fraction of those levels. As recently as Aug. 27, traders estimated that they stood at 6 million to 8 million barrels a day. Since then, at least two oil supertankers came under attack.
While crude prices have been restrained by the barrels that are being eked out of the strait, fuel supplies have been markedly tighter, with Ukrainian strikes on Russian refineries compounding the squeeze. That worsening impact was underscored by American diesel prices, which surged to the highest since mid-2022. In the US, the national average pump price for diesel climbed to $5.783 a gallon on Wednesday, surpassing the previous wartime peak set in April, according to the American Automobile Association.
“It’s the sum of all fears,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management in Copenhagen. “The market is increasingly concerned about military confrontation, in a situation where the Strait of Hormuz remains closed for longer. The war could easily spread like in March to the whole Middle East.”
Oil Prices
- WTI for October delivery climbed 0.3% to settle at $91.30 a barrel in New York.
- Brent for November settlement closed down 0.1% at $95.52 a barel.