West Texas Intermediate (WTI) US Oil trades around $73.10 on Wednesday at the time of writing, up 1.48% on the day, as investors reassess risks to global energy supply following a renewed deterioration in geopolitical conditions across the Middle East.
The Oil market is supported by comments from United States (US) President Donald Trump, who confirmed that the memorandum of understanding with Iran aimed at ending the conflict in the Middle East is now over
Speaking from the North Atlantic Treaty Organization (NATO) summit, Trump also said he no longer wants to negotiate with Iran after the latest attacks on commercial vessels transiting through the Strait of Hormuz. Tensions intensified after the US Central Command (CENTCOM) confirmed it had struck Iranian military infrastructure in response to Tehran’s attacks on several commercial ships in the Strait of Hormuz. The strategic waterway handles around one-fifth of global Oil supply, raising concerns over potential disruptions to energy flows.
ING analysts note that Oil prices have climbed, supported by renewed tensions in the Persian Gulf and the US decision to revoke a temporary license allowing certain Iranian Oil sales. The bank added that the move increases the risk of a breakdown in negotiations between Washington and Tehran, while declining US Crude and refined product inventories, together with fresh attacks on Russian refineries, are providing additional support for Oil prices. Meanwhile, BNY believes financial markets are becoming increasingly fragile as hopes for a swift return to normal shipping conditions through the Strait of Hormuz continue to fade.