Oil Market Soars as UAE Suspends Economic Ties With Iran

By Adedapo Adesanya

The oil market was elevated on Wednesday as investors worried about escalating ‌tensions in the Middle East, with the United Arab Emirates suspending all financial and economic transactions with Iran.

Brent crude futures settled at $91.62 a barrel after soaring by 60 cents or 0.7 per cent, while the US West Texas ​Intermediate (WTI) crude futures rose by 89 cents or 1.1 per cent to $85.83 a barrel.

The UAE has halted all trade, financial, and commercial ties with Iran until further notice, after saying Tehran had fired ballistic missiles targeting its territory.

Late on Tuesday, the UAE’s Defence Ministry said that “assessments revealed the two ballistic missiles detected, originating from Iran, were targeting maritime navigation and fell into the sea.” One of the missiles fell outside the Emirates’s territorial waters, while the second fell within its territorial waters, the ministry added.

In light of these missiles fired from Iran, the UAE halted all economic ties with Iran.

This development comes after US President Donald Trump ​said no talks were taking place with Iran and that the Strait of Hormuz was open. Iran, however, said the waterway remained shut.

The oil market remains focused on the Strait of Hormuz, through ‌which about ⁠one-fifth of global oil and liquefied natural gas supplies passed before the US-Israeli war on Iran began at the end of February.

Available data from Kpler showed that only six commodity vessels crossed the strait on Tuesday, down from nine a day earlier and below the 10-day daily average of 11.

Meanwhile, oil shipments from Russia’s western ports have fallen to about 2.3 million barrels per day in the first half of ​August, 15 per cent below the initial loading plan, because of disruptions at the Black Sea ​port of Novorossiysk.

Crude oil inventories in the US saw a massive increase of 4.4 million barrels during the week ending August 14, according to new data from the US Energy Information Administration (EIA) released on Wednesday.

The EIA’s data release follows figures from the American Petroleum Institute (API) that were released a day earlier, which reported that crude oil inventories had fallen by 328,000 barrels in the period.