Global Oil Market Reacts to Iraq Strikes and Rising US-Iran Tensions
SINGAPORE — Oil prices rose by about $3 a barrel on Wednesday after joint strikes in Iraq by the United States and Saudi Arabia, the interception of Iranian ballistic missiles aimed at US forces in the Middle East, and shrinking US crude inventories.
Brent futures increased by $3.15, or 3.8 percent, to $87.24 a barrel, while US West Texas Intermediate crude rose $2.73, or 3.4 percent, to $81.99 a barrel.
“Renewed strength comes after the US said it intercepted a surprise attack on US troops,” ING analysts said in a note, adding that the developments dampen expectations for a swift de-escalation in the Gulf.
The US and Saudi Arabia launched strikes on Iran-backed groups in Iraq on Wednesday, blaming them for drone attacks on Saudi oil facilities. The strikes came hours after the US military said it averted an Iranian attack on US troops in the region.
Only five commercial ships passed through the Strait of Hormuz on Tuesday, where tanker traffic remains low. Oman presented Iran with a plan backed by Gulf states to manage the waterway, including collecting voluntary fees for its use, but Tehran ruled out the proposal, an Iranian official said Wednesday.
“We believe Brent oil prices will continue to whipsaw in the $80-$100 per barrel range in the near term as the conflict ebbs and flows,” said Suvro Sarkar, head of energy research at DBS Bank.
US crude inventories fell by about 3.3 million barrels in the week ended July 24, according to market sources citing American Petroleum Institute data. Supporting prices further, OPEC+ is likely to halt oil output increases for three months starting in October, sources told Reuters.
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