LONDON, United Kingdom / AfricaWire.IO / – Brent crude rose above $115 a barrel on Wednesday as traders reacted to reports of possible renewed US strikes on Iran. Brent futures climbed $1.48, or 1.3%, to $115.36 by 01:40 GMT, while US West Texas Intermediate crude rose $1.22 to $101.12. Both benchmarks recovered after two sessions of losses. By the close, Brent had settled at $115.32 and WTI at $102.78, according to CNBC.
CNBC reported that the gains followed reports that the United States had told Gulf countries to prepare for strikes on Iran after the US midterm elections. The prospect of renewed military action raised fresh concerns over supply through the Strait of Hormuz. WTI’s 2.9% rise outpaced Brent’s 1.3% gain on the day. The US benchmark returned to above $100 a barrel.
The rebound followed two days of declines driven by diplomatic efforts in the Middle East. On Tuesday, Brent fell $1.93, or 1.67%, to settle at $113.88 a barrel. WTI dropped $1.86, or 1.83%, to $99.90. Hopes of de-escalation had briefly eased supply worries before the latest reports. Rumours of attacks on Saudi energy infrastructure had also revived escalation fears earlier this month.
Hormuz attacks keep supply tight
Oil prices have climbed steadily this month. Brent hit $110 a barrel on October 17, its highest close since May 19 at $109.86. Attacks around the Strait of Hormuz surged in mid-October, after Iran said it was stepping up strikes in response to a US blockade of its ports and tougher sanctions introduced in September. Analysts at Kpler said the attacks had sharply reduced Gulf crude flows.
Brent had already surged above $103 early in the month. It gained 4.9% in the week to October 17, while WTI jumped 10.4%. The benchmark has risen from around $70 a barrel in February, as the conflict disrupted one of the world’s most important shipping routes. One-fifth of global oil and liquefied natural gas trade previously passed through the strait. Importers have paid more to secure supplies through other routes.
Fuel costs rise for importers
Higher crude prices are raising costs for energy-importing economies. Japan, which imports almost all of its oil, has seen its import bill climb this year. Diesel and gasoline futures reached record seasonal highs earlier this month, according to Bloomberg, with diesel settling at $4.90 a gallon in New York on October 17. Doubts over Russian fuel supplies after a drone attack on the Ryazan refinery added to the pressure. Rising fuel costs are also affecting shipping and transport across many industries.
At Wednesday’s close, the gap between Brent and WTI stood at about $12.50 a barrel. Traders are watching both diplomatic efforts and military developments in the region. Weekly US inventory figures from the Energy Information Administration are also in focus. Prices have swung sharply in recent sessions on news from the Middle East.