Oil Prices Hit 3-Week High as Hormuz Strait Standoff Curbs Tanker Traffic

Oil prices extended their gains for a fourth straight session on Wednesday, driven by mounting concerns over global supply disruptions as a standoff between the U.S. and Iran significantly curbed tanker traffic through the strategic Strait of Hormuz.

As of 4:43 AM ET, the global benchmark Brent crude futures rose 0.3% to $91.32 per barrel, while West Texas Intermediate (WTI) crude futures climbed 0.4% to $85.28 per barrel. Both contracts were trading near their highest levels in approximately three weeks.

Shipping Disruptions Intensify

The primary driver for the price surge is the escalating risk in the Strait of Hormuz, a vital chokepoint for global oil trade. Shipping data cited by Reuters showed a marked decline in vessel transit due to the uncertainty.

• Data from Kpler, reported by Reuters, revealed that only six commodity ships passed through the strait on Tuesday.
• This is a sharp drop from nine vessels the previous day and a 10-day daily average of 11 ships.

In a research note, analysts at ING commented on the market impact, stating, "Reports of reduced vessel traffic... have raised market concerns about the risk of crude supply disruptions."

Geopolitical Tensions Remain High

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Diplomatic efforts to de-escalate the situation appear stalled. Iran has stated the strait will remain closed until the U.S. meets conditions of a now-expired interim agreement signed in June, a claim U.S. officials have denied, insisting the waterway is open. Both Washington and Tehran have confirmed no new negotiations are currently planned.

Underscoring the regional concerns, Al Jazeera reported that the U.S. Secretary of State held a call with the UAE's National Security Advisor, where both sides stressed the importance of maintaining freedom of navigation in the strait.

U.S. Inventories Signal Tightness

Adding further upward pressure on prices, industry data pointed to tightening supply in the United States. The American Petroleum Institute (API) reported a slight decrease in U.S. crude inventories last week.

While the API figures often precede official government data, due later on Wednesday, they reinforced the narrative of a tightening domestic market. This comes as U.S. Strategic Petroleum Reserves have already fallen to their lowest levels in over 40 years amid heightened geopolitical friction.