(RTTNews) – Crude oil prices have surged on Wednesday as the U.S. and Iran continued to trade attacks against other, thereby continuing the Middle East conflict while diminishing investors’ expectations on the reopening of the Strait of Hormuz, renewing long-term inflation concerns.
WTI Crude Oil for October delivery was last seen trading up by $2.98 (or 3.20%) at $96.01 per barrel.
On Sunday, in an interview with ABC News, U.S. Energy Secretary Chris Wright stated that the U.S. may not be able to strike an agreement with Iran on its nuclear programs.
The same day, in a move to expand Iran’s strategic control beyond the Strait of Hormuz, the Secretary of Iran’s Supreme National Security Council Mohsen Rezaei announced plans to declare a maritime “exclusion zone” outside the Strait of Hormuz.
Today, Iran’s Islamic Revolutionary Guards Corps stated that the maritime restricted area will extend from Chabahar on Iran’s southeastern coast into parts of the Gulf of Oman and the Arabian Sea. The precise coordinates will be announced soon by the IRGC. The IRGC warned that vessels passing through the restricted area will face sanctions.
Following an attack by U.S. forces on three Iranian oil tankers on September 5, the U.S. and Iran continued attacks and counter-attacks on each other’s targets.
Late on Tuesday, accusing Iran of launching ballistic missiles at a U.S. Navy warship, U.S. military announced destroying five Iranian crude oil carriers.
While four of the carriers, M/T Kaviz, M/T Charminar, M/T Horizon 1, and M/T Riesco were hit in the Gulf of Oman, another M/T Derya was struck near Kharg Island.
In retaliation, IRGC targeted two U.S. vessels and eight oil tankers in the Strait of Hormuz as well as a U.S. military base in Al Azraq, Jordan.
Besides this, IRGC claimed that Iran’s Navy recovered a U.S. unmanned underwater vehicle in the Strait of Hormuz. However, the U.S. merely stated that it lost one underwater drone due to a malfunction.
With no report of any dialogue process scheduled between the U.S. and Iran, the status of the Strait of Hormuz remains uncertain amid Iranian threats, and as a result, shipping traffic continues to hover in single digits.
Citing Kpler’s data, Reuters reported that six commodity vessels passed through the Strait of Hormuz on Tuesday. On Monday, it was nine, still below the 10-day average of about 12 per day.
Meanwhile, the United Kingdom Maritime Trade Operations center announced that an “unknown projectile” struck a civilian vessel 28 nautical miles southeast of Al Faw in Iraq.
Saudi Arabia paused operations at several energy facilities along its southern border following Tuesday’s attacks by Iran-backed Yemen’s Houthi militants. The rebel group also targeted Saudi Arabia’s Aramco’s facilities in Abha, Najran, and Jazan.
In Europe, in the ongoing Russia-Ukraine war, today Ukraine hit Novorossiysk, Russia’s key oil terminal in the Black Sea.
On the production front, last Sunday, the Organization of Petroleum Exporting Countries agreed to hold the alliance’s production quota at the same level due to the prevailing global economic uncertainty as well as the ongoing supply disruptions in the gulf due to the closure of the Strait of Hormuz.
Today, Bloomberg reported that Iraq has asked OPEC for a substantially higher crude oil production baseline for future quotas.
Experts are concerned that with a resolution of the U.S.-Iran conflict remaining elusive, high prices for over six months that added to inflationary pressures is set to affect global demand negatively.
Due to Monday’s Federal Holiday on account of Labor Day in the U.S., the weekly inventory report by the U.S. Energy Information Administration will be released tomorrow.
As of Wednesday, the national average gasoline prices hovered around $4.2245 in the U.S., according to American Automobiles Association’s data.
The U.S. dollar index was last seen trading at 98.75, down by 0.03 (or 0.03%) today.
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