(RTTNews) – Crude oil prices have jumped on Wednesday, adding to the strong gains from the two previous sessions as concerns of a drawn-out gulf war deepen after the U.S. commenced its second round of attacks against Iran yesterday, prompting Iran’s forceful retaliation. Reports of record level oil moving out of the Strait of Hormuz on Monday capped the gains.
WTI Crude Oil for October month delivery was last seen trading up by $0.97 (or 1.08%) at $91.19 per barrel.
Expectations for a quick easing of the Middle East tensions diminished yesterday after U.S. President Donald Trump announced a second round of strikes on Iran. Trump also warned that any retaliation by Iran would result in fiercer strikes.
These overnight attacks were conducted to disable Iran’s capability to carry out strikes on commercial ships transiting the Strait of Hormuz.
Within hours of these strikes, Iran retaliated by targeting U.S. bases in the United Arab Emirates, Bahrain, Jordan, Iraq, and Kuwait.
Denying reports that the U.S. wanted to force Iran back for negotiations, Trump stated that he was satisfied with the status quo.
Iran’s Supreme Leader Mojtaba Khamenei stated that Iran’s military has some “unforgettable lessons” in store for the U.S.
Yesterday, U.S. Energy Secretary Chris Wright arrived in Venezuela for the signing ceremony of a landmark oil deal reached between the U.S. government and Venezuela.
Days before, Trump announced the massive deal that allows the U.S. to create and control a private company that will hold 65 billion barrels in proven oil reserves. Other U.S. energy firms are expected to follow suit.
Of note, Venezuela holds roughly 303 billion barrels of oil reserves.
In an interview with CNBC, Wright claimed that the shipborne oil flow through the Strait of Hormuz exceeded 17 million barrels on Monday, a level not seen since the start of the U.S.-Iran war in late February.
Weeks before the February 28 outbreak of war, the strait saw the transit of roughly 20 million barrels of crude and petroleum products every day.
Commenting that Iran is losing its ability to hold the world as an economic hostage, Wright claimed that U.S. military is assisting tankers through the narrow seaway without any incident.
Wright asserted that oil and gas will continue to flow out of the gulf region, with or without Iran.
Iran continued to warn vessels to coordinate with Iranian authorities or risk being attacked.
This week, at least two vessels suffered hits, according to the United Kingdom Maritime Trade Operations centre.
The U.S. military created a shipping corridor very close to Oman’s coastline to aid tankers belonging to the U.S. allies in gulf. The vessels moved at night, keeping their transponders off.
Citing Kpler, Reuters reported that only four tankers crossed the strait on Tuesday.
Windward reported four tankers entering the strait (two in “dark” mode) and three exiting (one in “dark” mode).
Wright claimed that the U.S. data is far more reliable as private trackers miss covert transits.
On the inventory front, data from the American Petroleum Institute showed crude oil inventories decreased by 2,600,000 barrels for the week ending August 28 following a 4,200,000-barrel increase in the previous week.
According to the U.S. Energy Information Administration, for the week ending August 28, crude oil inventories decreased by 4,450,000 barrels. At Cushing’s Oklahoma Delivery Hub, inventories increased by 80,000 barrels.
For the same period, while gasoline inventories decreased by 1,173,000 barrels, distillate inventories increased by 796,000 barrels, and heating oil inventories decreased by 33,000 barrels.
After years of disagreements over production targets, the United Arab Emirates recently moved out of the Organization of Petroleum Exporting Countries.
On Friday, Bloomberg reported that Venezuela is weighing options to leave OPEC.
Already Iraq had warned that it could reconsider staying with the OPEC if its production quota expectations were not met.
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