Oil prices rose sharply on Wednesday as renewed military attacks in the Middle East raised concerns over possible disruptions to global crude supplies following several days of relative de-escalation.
At around 11:00 GMT, North Sea Brent crude for September delivery was up 5.32% at $88.56 a barrel. US West Texas Intermediate crude for the same month rose 5.02% to $83.23 a barrel.
Attacks weaken hopes of de-escalation
Iranian state television reported that US forces had carried out strikes in the north-west of the country.
The US military said overnight that it had intercepted Iranian missiles before launching a joint operation with Saudi Arabia against Iran-aligned militias in Iraq.
“These developments reduce hopes of a rapid de-escalation of tensions in the Persian Gulf,” ING analysts Warren Patterson and Ewa Manthey said.
Markets had shown greater optimism on Tuesday after US President Donald Trump said talks with Tehran had a “very good chance” of producing an agreement.
However, the ING analysts warned that the growing frequency of attacks on Saudi oil infrastructure was increasing the risk of prolonged supply disruptions.
Concerns over Saudi refinery operations
Recent attacks by Yemen’s Iran-aligned Houthi rebels against Saudi Arabia reportedly forced Saudi Aramco to suspend operations at its Jizan refinery, which has a capacity of 400,000 barrels per day, according to PVM analyst Tamas Varga.
“If confirmed, this will further reinforce concerns over the refined petroleum products market,” the ING analysts said.
The market is already facing disruption in Russia as a result of Ukrainian attacks.
Strait of Hormuz remains under pressure
Shipping through the strategically important Strait of Hormuz also remains under Iranian control, with Tehran seeking to maintain its authority over the area and impose transit fees on vessels.
Iran’s Revolutionary Guards said on Wednesday that they had struck three oil tankers attempting to pass through the strait, according to Iran’s Tasnim news agency.
“Falling inventories and significant concerns over prolonged supply disruption clearly support refined product prices,” Varga said, adding that these were rising faster than crude oil prices.
Source: CNA
