By: Economy Middle East

Oil prices climbed on Wednesday, supported by growing uncertainty over a potential U.S.-Iran peace deal and attacks on two vessels that heightened concerns over possible supply disruptions in the Middle East. The gains came despite industry data pointing to an increase in U.S. crude inventories.

As of 5:03 GMT, Brent crude futures had risen 53 cents, or 0.60 percent, to $89.44 a barrel, while U.S. West Texas Intermediate (WTI) crude advanced 52 cents, or 0.62 percent, to $83.72 a barrel.

Hormuz tensions persist as traffic falls further

Oil prices ended Tuesday’s session more than $1 higher, reaching their strongest levels since July 31. The gains followed a roughly 5 percent surge on Monday as expectations for a U.S.-Iran peace agreement weakened.

The United States and Iran-aligned Houthi forces in Yemen reported separate attacks on commercial shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday, adding to concerns over the security of key global trade routes.

Iran’s top security official, Mohsen Rezaei, said the Strait of Hormuz would remain closed unless Washington agreed to Tehran’s conditions for ending the conflict. These demands include the release of frozen Iranian assets and an end to other regional conflicts.

Meanwhile, shipping data showed traffic through the Strait of Hormuz fell to just six vessels on Monday, well below the 10-day average of around 11 vessels. Before the war, the strategic waterway typically handled between 125 and 140 vessels a day.

Mideast supply disruptions to remain until end-2027

Oil prices also declined as the U.S. Strategic Petroleum Reserve (SPR) fell below 300 million barrels last week, according to data from the Department of Energy (DOE), as the stockpile continued to be drawn down amid the Iran conflict. The reserve declined by 6.1 million barrels to 298.7 million barrels, marking a further reduction in U.S. emergency oil supplies.

The SPR, established by the U.S. government to provide crude during major supply disruptions, has been steadily depleted this year as authorities sought to offset the impact of the Iran conflict on oil markets.

In March, President Donald Trump ordered the release of 172 million barrels from the reserve in response to the conflict.

On the supply side, sources citing American Petroleum Institute (API) data reported a sharp increase in U.S. crude stocks for the week ended August 7, while gasoline and distillate inventories declined. According to Reuters, U.S. crude inventories increased by around 9.1 million barrels from the previous week. Gasoline stocks fell by 1.5 million barrels, while distillate inventories declined by 596,000 barrels.

The larger-than-expected crude build could ease concerns over tight supply if confirmed by the Energy Information Administration (EIA). The EIA is scheduled to release its official inventory figures at 14:30 GMT on Wednesday.

Looking further ahead, the EIA expects disruptions to Middle East crude supplies of around 600,000 barrels per day to continue through the end of 2027.