Global oil prices climbed to their highest levels in nearly six weeks on Wednesday as escalating hostilities between the United States and Iran raised fresh concerns over disruptions to vital Middle East shipping routes.
Brent crude futures rose $2.84, or 3.1 per cent, to $93.85 a barrel, while U.S. West Texas Intermediate (WTI) crude gained $2.93, or 3.5 per cent, to $87.27. Both benchmarks touched their strongest levels since June 11.
The rally came after the U.S. military confirmed it had launched an 11th consecutive night of strikes against Iran. The renewed attacks followed reports from Kuwait that its air defence systems intercepted Iranian drones early Wednesday.
Oil markets were also rattled by growing concerns over the safety of two of the world’s most important energy transit corridors—the Strait of Hormuz and the Bab el-Mandeb Strait.
Iran-backed Houthi rebels in Yemen have threatened to target vessels carrying Saudi crude through the Bab el-Mandeb and announced what they described as a naval blockade of Saudi Arabia, adding to fears of wider supply disruptions.
“The energy market now has the dual-strait worry,” said Tim Waterer, Chief Market Analyst at KCM Trade. “The Bab el-Mandeb is emerging alongside the Strait of Hormuz as another major flashpoint, with traders closely watching shipping movements in the Red Sea.”
The Bab el-Mandeb has become increasingly important for Saudi oil exports as traffic through the Strait of Hormuz has declined sharply since the collapse of the U.S.-Iran ceasefire earlier this month.
Shipping disruptions intensified after three tankers carrying Saudi crude to China and India reportedly turned back in the Red Sea on Tuesday, opting to head toward the Suez Canal instead of sailing near Yemen following Houthi warnings.
Frank Walbaum, a market analyst at Naga.com, said the diversions could tighten physical oil supplies and place additional pressure on Saudi exports, providing further support for higher prices.
Asian refiners are now exploring alternative routes, including transporting crude from Saudi Arabia’s Red Sea export terminal at Yanbu through the Suez Canal and around the Cape of Good Hope to avoid potential attacks.
Despite the geopolitical risks, recent U.S. inventory data offered mixed signals. Figures from the American Petroleum Institute showed crude oil and distillate stockpiles increased last week, while gasoline inventories declined. Investors are awaiting official inventory data from the U.S. Energy Information Administration later on Wednesday for a clearer picture of supply conditions.
