Oil prices rose more than 2% on Tuesday to their highest in more than a week as ongoing disruption to Middle East energy flows and fading hopes for a U.S.-Iran peace deal heightened concern over global oil supplies.
Brent crude futures rose $2.09, or 2.38%, to $89.81 a barrel by 0952 GMT. U.S. West Texas Intermediate crude futures were up $2.15, or 2.62%, at $84.28. Both benchmarks were trading at their highest since July 31.
Both contracts had jumped more than 5% on Monday after U.S. President Donald Trump responded to Iran’s conditions for a peace deal with his own demands that Iran pay compensation for people killed in wars, attacks and protests, which is likely to complicate efforts to reopen the Strait of Hormuz.
Later in the day he added that the U.S. had control of the strait and had swept the strategic oil waterway for Iranian mines.
“There’s no clear path to a solution and to a full reopening of the strait at this point in time, and that’s adding renewed upside pressure on prices,” said Saxo Bank’s head of commodity strategy, Ole Hansen, adding that meaningful supply disruption is ongoing.
Shipping data showed that traffic through the Strait of Hormuz dropped to six vessels on Monday, compared with a 10-day average of about 11 vessels.
In a note on Monday, Barclays analysts said that crude oil and refined product net exports through the Strait of Hormuz averaged 3 million barrels per day (bpd) in the week ending August 7, down from 4.4 million bpd the previous week.
Before the Iran conflict began in late February, about a fifth of global daily oil and liquefied natural gas supplies passed through the Strait of Hormuz.
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A cargo ship was attacked on Tuesday by Yemen’s Iran-aligned Houthis in the Bab el-Mandeb Strait, killing three crew members, said two Yemeni coast guard sources and two military officials in the government.
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“The chokehold risk around both the Strait of Hormuz and the Bab el-Mandeb remains highly significant. Even intermittent restrictions or the threat of further incidents keep insurance costs elevated and force longer shipping routes … hence energy flows look likely to stay constrained near term,” said Tim Waterer, chief market analyst at KCM Trade.
Saudi Aramco (2222.SE), opens new tab has postponed the restart of its 400,000 barrel per day Jazan refinery to August 30 after the Houthis claimed two attacks on the plant on Sunday.
The Abu Dhabi National Oil Company (ADNOC), meanwhile, is offering spot crude in a tender — its eighth since the start of June as the UAE state oil company works to move oil from the Strait of Hormuz.
Elsewhere, the Ukrainian military said on Tuesday that it had attacked an oil refinery in Orsk, the second-largest city in Russia’s Orenburg region and an important industrial hub.