Oil Rises as Markets Weigh Iran War De-escalation Hopes, Hormuz Risks

By Adedapo Adesanya

Oil was up on Wednesday morning as the market swung between hopes for a de-escalation in the US-Israel war on Iran and concerns about attacks on shipping in the Strait of Hormuz.

Brent futures climbed $1.04 or 1.1 per cent to $92.53 a barrel, while US West Texas Intermediate (WTI) crude rose 67 cents or 0.8 per cent to $86.71 per barrel.

Recent data showed ⁠little sign of fewer attacks in November, after 37 ships were attacked in October, the highest monthly total since the start of the Middle East war, according to data from the Washington Institute for Near East Policy.

Market analysts noted that the market is looking at the extent to which Iran will come to the table with US demands to reach a diplomatic agreement.

Others worry that even in the event a deal is struck, an increase in flows through the waterway would still depend on mine clearance, insurance costs and whether or not shipowners would even be willing to take the risk.

US officials had earlier downplayed the need for further military strikes against Iran; however, an Iranian security official said no talks were taking place between the two sides.

In Russia, oil refining capacity has been reduced by ⁠about 30 per cent since late October following renewed Ukrainian drone attacks.

Russian and Ukrainian officials met in Abu Dhabi in the United Arab Emirates (UAE) on Tuesday for their first peace talks since February, as US President Donald Trump’s envoys launched a fresh push to end the war.

Houthi attacks on Saudi infrastructure also continue, further clouding the security situation in the Middle East and limiting the downward potential of oil prices, especially after one of the latest targets of the Houthis was the East-West pipeline, again.

The American Petroleum Institute (API) estimated that crude oil inventories in the United States rose by 9.0 million barrels in the week ending November 6. In the week prior, US crude oil inventories fell by 5.267 million barrels.

Official data from the US Energy Information Administration (EIA) will be released later on Wednesday.