(Bloomberg) – Oil turned higher as President Donald Trumpwarned of imminent U.S. attacks against Iran and domestic crude inventories posted another steep drop.
Map of the Strait of Hormuz. (Map Source: Global Energy Infrastructure.)
West Texas Intermediate crude rose 2.1% to settle above $91 a barrel, reversing an earlier decline. Trump said the U.S. will “hit Iran hard again today,” a departure from his usual rhetoric that seeks to talk oil prices lower. He declined to specify targets. Iran said it would stand firm against any threat.
The comments marked the latest instance of the president’s renewed criticism of Tehran, which he says has taken too long to negotiate an end to a conflict that has triggered the largest oil supply disruption in history. The military escalation has heightened concerns that a U.S.-Iran peace deal remains far off, reducing the likelihood that the Strait of Hormuz is unlikely to reopen in the near term.
“Oil prices are rising once more as Trump warns Iran has to pay the price for taking too long to negotiate,” said Fawad Razaqzada, market analyst for global macro at StoneX. “Against this backdrop, the risks to our crude oil forecast remain tilted to the upside.”
Earlier, U.S. forces attacked sites near the strait, while Iran launched a drone strike on the U.S. Fifth Fleet in Bahrain in response, state-run IRIB reported. U.S. forces also disabled the Palau-flagged M/T Settebello oil tanker in the Gulf of Oman, U.S. Central Command said in a poston X.
U.S. government data on Wednesday, meanwhile, showed that crude inventories fell 7.2 MMbbl last week. Stockpiles at the key hub in Cushing, Oklahoma, also declined, although they remained above operational minimum thresholds. The nation’s inventories are still hovering at the lowest in four months, reflecting the drawdown in global supplies as buyers try to replace barrels lost from the Persian Gulf.
“At the moment the market is trying to find some equilibrium,” Wael Sawan, Chief Executive Officer of Shell Plc, said at the Wall Street Journal CEO Council in London. “It’s more driven by short-term headlines. And so if I look at the reality, we’re of course drawing down on those inventories fast.”
Despite the higher tensions, crude futures are down by more than a quarter since their peak at the end of April, aided by a combination of a plunge in Chinese imports to multiyear lows, large releases of emergency reserves and a steady trickle of crude still finding its way through the strait. The retreat is a sign that oil markets are, for now at least, coping with the disruption andphysicalmarkets look well supplied.
Trump said Wednesday that more than 200 commercial ships and 100 MMbbl of oil have exited the waterway since he directed a “secret mission” to support such maritime commerce. At least some of the ships that have crossed are doing so under the cover of darkness, and with lights on board switched off, people with knowledge said.
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