Brent Crude Surpasses $96 as U.S.-Iran Tensions Rattle Oil Markets

Oil prices extended their rally for a third consecutive session on Wednesday, with global benchmark Brent crude surpassing $96 per barrel, as escalating military confrontations between the United States and Iran in the Middle East fueled fears of significant and prolonged supply disruptions.

As of 20:56 ET (00:56 GMT), Brent oil futures for November delivery rose 1.6% to $96.18 a barrel, while West Texas Intermediate (WTI) crude futures also gained 1.6% to trade at $91.65 a barrel. Both benchmarks reached their highest levels in about five weeks, building on a nearly 5% jump in the previous session.

Strait of Hormuz Conflict Intensifies

The latest price surge follows new U.S. strikes on Iranian targets and retaliatory Iranian attacks on U.S. forces and commercial vessels near the Strait of Hormuz, one of the world's most critical oil transit chokepoints. The renewed conflict has raised immediate concerns about the safety and viability of tanker movements through the waterway.

These risks were underscored by incidents on Monday where two supertankers carrying Saudi crude were hit by unidentified projectiles, according to market reports. Citing preliminary data from Kpler, tanker traffic through the strait was extremely limited on Monday, with only five commodity vessels crossing.

Supply Concerns Mount

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The geopolitical tensions are compounding an already tight supply outlook. Iranian crude exports have been severely curtailed by the conflict, with Reuters reporting that loadings fell to between 220,000 and 255,000 barrels per day (bpd) in August. This marks a dramatic drop from approximately 2 million bpd in March.

Investors are concerned that a prolonged confrontation could deepen what is already a significant supply shock, further restricting the flow of Middle Eastern crude to global markets.

U.S. Inventories Add to Upward Pressure

Adding to the bullish sentiment, industry data released late Tuesday pointed to tightening U.S. stockpiles. The American Petroleum Institute (API) reported that U.S. crude inventories fell by 2.6 million barrels in the week ended August 28, reversing a 4.2 million-barrel increase from the week prior.

The API data, which precedes the more closely watched weekly report from the U.S. Energy Information Administration (EIA), also showed a 300,000-barrel rise in gasoline stocks and a 300,000-barrel decline in distillate inventories. The official EIA figures are due later Wednesday.