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Oil Prices Rise on Middle East Tensions Despite Large US Crude Build
Oil prices rose in early trading on Wednesday, pushed higher by escalating supply concerns in the Middle East, even as industry data pointed to a significant build in U.S. crude stockpiles.
By 0053 GMT, Brent crude futures for October delivery gained 72 cents, or 0.81%, to trade at $89.63 a barrel. U.S. West Texas Intermediate (WTI) crude climbed 71 cents, or 0.85%, to $83.91 a barrel. Both benchmarks had settled over $1 higher on Tuesday, reaching their highest closing prices since July 31.
Geopolitical Risks Escalate
The primary driver for the price increase remains geopolitical tension. Hopes for a U.S.-Iran peace deal have diminished, while recent attacks on commercial vessels in the Strait of Hormuz and the Bab el-Mandeb Strait have heightened fears of widespread supply disruptions.
Adding to market anxiety, Iran's top security official, Mohsen Rezaei, stated Tuesday that the critical Strait of Hormuz would remain closed unless the U.S. met Iran's conditions, according to a Reuters report. Shipping data underscored the impact, showing traffic through the strait fell to just six vessels on Monday, a sharp drop from the 10-day average of about 11.
AdUS Inventory Data Offers Counterpoint
In a development that could temper supply fears, preliminary data from the American Petroleum Institute (API) showed a substantial increase in U.S. crude inventories. According to market sources citing the API figures, crude stocks rose by approximately 9.1 million barrels for the week ended August 7.
This build far exceeded analyst expectations from a Reuters poll, which had forecast a decline. The API data also indicated a decrease in refined product stockpiles, with gasoline inventories falling by 1.5 million barrels and distillate stocks down by 596,000 barrels. If the large crude build is confirmed by official government data, it could ease concerns about market tightness, according to a note from Haitong Futures. The official report from the U.S. Energy Information Administration (EIA) is due at 10:30 a.m. ET.
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