Oil prices climbed on Wednesday after two vessels were struck in the Strait of Hormuz. Iranian officials said Tehran was deploying new methods to target ships, a move that is described as an attempt to keep crude prices high and to influence the US midterm elections.
Brent crude futures rose 63 cents, or 0.6%, to $106.32 a barrel by 0345 GMT. US West Texas Intermediate crude gained 66 cents, or 0.7%, to $94.80 a barrel. Both contracts had climbed by more than $1 in earlier trading before giving back part of those gains.
Iran signals new approach against vessels in Hormuz
The Iranian officials did not explain what the new strategy involved. One of them said Iran had begun using different offensive tactics about 10 days ago against ships it regarded as breaching its restrictions, and said this had produced a rise in attacks on such vessels.
The UK Maritime Trade Operations said on Tuesday that a container ship and a tanker had been hit by unidentified projectiles inside the strait. Priyanka Sachdeva, head of market insights at Phillip Nova, said Iranian officials were “openly admitting to undermining US efforts to keep oil prices under control.” She said this showed what lay behind the so-called peace talks.
Sachdeva also argued that Iran understands the strategic weight of its location and the damage that higher oil prices can do to the global economy. In her view, Tehran may be willing to use that leverage.
Houthi attack on Saudi Aramco building in Dhahran
Elsewhere, the Iran-allied Houthis attacked an administrative building belonging to the state-owned oil company Saudi Aramco in the city of Dhahran, causing a limited fire, Saudi Arabia’s energy ministry said on Wednesday.
The group has fired ballistic missiles and drones at Saudi Arabia over the past week, which it presented as retaliation for the kingdom’s support of Yemeni government forces. Riyadh’s international airport has been struck four times, and a strike on Saturday killed 13 people.
Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, a unit of Nissan Securities, said that “supply concern stemming from conflict between the Houthis and Saudi Arabia is driving prices higher.”
Diesel exports and OPEC+ output shape market outlook
Last month, Saudi Arabia increased oil production despite shipment disruptions linked to the US-Iran war. OPEC said on Tuesday that this had led to a sharp production increase from OPEC+, the group of the Organization of the Petroleum Exporting Countries and partners including Russia.
Kikukawa said expectations of higher Russian diesel exports could ease market tightness and were likely to restrain sharp moves in either direction. He projected WTI to trade between $90 and $100 a barrel.
In Russia, the government said on Tuesday that it saw no direct link between peace talks with Ukraine and its agreement to export diesel to the US. The statement followed a report that US envoys had told Ukrainian officials on Friday that the deal was part of an effort to bring Russia back to negotiations on a peace settlement.
