Oil prices advanced for a third consecutive session on Wednesday, as a fresh round of reciprocal strikes between the United States and Iran cast doubt over the prospects for a peace agreement that would reopen the Strait of Hormuz.
WTI crude climbed by 2.4%, settling near $96 per barrel, bringing its weekly gain to approximately 9.6%. The move followed a U.S. military statement that it had come under missile and drone attack shortly after striking an empty oil tanker bound for Iran. Iranian forces also targeted a major U.S. naval base in Bahrain and another air base in Kuwait.
Conflicting statements from Iran and the U.S. earlier in the week regarding the potential for a peace deal had already heightened price volatility. Military actions by Israel in Lebanon added a further layer of complexity to the negotiations.
As talks between the U.S. and Iran remain stalled, global supply buffers are depleting rapidly. U.S. government data shows national petroleum inventories have fallen for eight consecutive weeks, the longest streak of declines since early 2022. Crude stocks at Cushing, Oklahoma, the delivery point for the U.S. benchmark futures contract, fell for a sixth straight week, approaching the so-called minimum operating level.
As the trading session neared its close on Wednesday, a report from Iran's semi-official Tasnim news agency stated that communication with the U.S. was ongoing, but no progress had been made in talks so far.
"Uncertainty is the dominant theme for now, but the likelihood of a credible peace deal remains low as long as there is no agreement on Iran's highly enriched uranium, the Strait of Hormuz, and the situation in Lebanon," said Florence Schmit, an energy strategist at Rabobank.
At the market close, the July WTI crude oil futures contract was up 2.4% at $96.02 per barrel.
The August Brent crude contract rose 1.9% to settle at $97.81 per barrel.
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