LONDON, United Kingdom / AfricaWire.IO / – Oil prices rose on Wednesday, with Brent crude futures climbing $1.48, or 1.3%, to $115.36 a barrel by 01:40 GMT. US West Texas Intermediate crude futures gained $1.22, or 1.22%, to $101.12 a barrel. The increase reversed part of the losses from the previous two sessions. Brent later settled 1.3% higher at $115.32 a barrel, while WTI rose 2.9% to $102.78, CNBC reported.
Traders were weighing the risk of renewed military escalation between the United States and Iran. Prices rose after reports that Washington had told Gulf countries to prepare for US strikes on Iran after the midterm elections, according to CNBC. The reports revived concerns over supplies passing through the Strait of Hormuz. The waterway has been at the centre of supply fears throughout the year.
On Tuesday, Brent settled down $1.93, or 1.67%, at $113.88 a barrel, its second consecutive daily decline. WTI fell $1.86, or 1.83%, to $99.90. The losses came as a renewed diplomatic push to ease tensions in the Middle East briefly calmed the market. Earlier this month, rumours of attacks on Saudi energy infrastructure had revived fears of a wider escalation. Wednesday’s gains showed how quickly sentiment can shift on geopolitical news.
Prices hold near multi-month highs
Brent touched $110 a barrel on October 17 for the first time since May, settling at $109.86. Earlier in October, the benchmark had topped $103 as attacks around the Strait of Hormuz intensified. Iran said it was stepping up strikes in response to a US blockade of its ports and tougher sanctions. Analysts at Kpler said those attacks had sharply reduced Gulf crude flows. They expected a slow and uneven recovery without a comprehensive political deal.
The rally has raised energy costs for importing countries. Japan, which imports almost all of its oil, has cited higher crude prices as a factor behind its recent trade deficits. Diesel and gasoline futures reached record seasonal highs earlier this month, according to Bloomberg, and diesel futures settled at $4.90 a gallon in New York on October 17. Doubts over Russian fuel supplies after a Ukrainian drone attack on the Ryazan refinery added to the pressure. Higher fuel prices are also feeding into transport and shipping costs.
WTI back above $100
WTI moved back above $100 a barrel after slipping below that level on Tuesday. The US benchmark had settled at $101.41 on October 17, its highest since mid-September, after jumping 10.4% in a single week. At Wednesday’s close, the gap between Brent and WTI stood at more than $12 a barrel. Traders are monitoring shipping through the Gulf for signs of further disruption.
Market participants are also watching diplomatic efforts in the region, which weighed on prices earlier in the week. Any agreement easing tensions around the Strait of Hormuz could put pressure on prices, while further escalation could push them higher. Weekly US inventory data from the Energy Information Administration are also in focus. Brent has risen from around $70 a barrel in February.