Oil rises 1%, as US-Iran strikes risk limiting already impaired supplies

Brent crude prices rose 1% in a volatile session on Wednesday, driven by renewed military strikes between the U.S. and Iran that have ‌restricted world oil supply.

The U.S.-Iran war is now in its seventh month, with the recent attacks representing the biggest exchange of fire between Tehran and Washington since July. U.S. forces struck Iran’s southern coast and Iran fired on American bases across the region.

Brent crude futures rose $1.12, or 1.2%, to $95.76 a barrel. U.S. West Texas Intermediate crude futures were up 92 cents at $91.18.

Brent and WTI swung between gains of as much as $2 a barrel and losses of $1 a barrel throughout the session. The session highs for both benchmarks were the highest since July 24.

The war began with joint U.S.-Israeli strikes on Iranian targets in late February. Since then, Iran has effectively shut down shipping traffic in the Strait of Hormuz, a critical waterway that carried about a fifth of global oil and LNG consumed before the conflict.

Nations worldwide have been trying to limit price rises by finding other sources of supply and relying on their reserves, which have also dwindled.

“While the increase in conflicts will slow transit through the Strait of Hormuz in the near term, the market has absorbed the fact that workaround crude oil supplies can still make it to the market eventually,” said Dennis Kissler, senior vice president of trading at BOK Financial.

The Islamic Revolutionary Guard Corps said the U.S. attacks would further restrict traffic through the strait. On Tuesday, U.S. Secretary of Energy Chris Wright claimed that 17 million barrels of oil transited the Strait of Hormuz on Monday, calling it the largest ‌volume of crude to pass through the waterway since the Iran war began.

On Tuesday, four commodity vessels transited the Strait of Hormuz, below the 10-day average of around 13, preliminary Kpler shipping data showed on Wednesday. Two oil tankers hit sea mines and were disabled while attempting to transit the strait, Iran’s Revolutionary Guards said on Wednesday in a statement shared by state media.

Iran also added more ships it deems as non-compliant and subject to fines, confiscation or detention if they try to sail through the Strait of Hormuz, according to a government website.

In August, Iraq boosted its oil exports, and shipments were set to climb again in September as wide profits and Iranian approval for its tankers to pass through the Strait of Hormuz have encouraged buyers, according to industry sources and shipping data.

OPEC+ is likely to keep its oil output policy unchanged for October at a meeting on Sunday, three sources close to the matter told Reuters, as the producer group completes the unwinding of one layer of production cuts this month and turns its focus to 2027 quota negotiations.

Elsewhere, Russia carried out a heavy missile and drone attack on energy infrastructure in Ukraine’s southern region of Odesa overnight, transmission system operator Ukrenergo said on Wednesday.

In the U.S., crude oil inventories fell by 4.5 million barrels last week, the Energy Information Administration said on Wednesday, compared with analysts’ expectations in a Reuters poll for a 1.1 million-barrel draw.