Oil prices rose by around 1% after falling to a two-month low in the previous session. The market reacted to the ongoing attacks on ships in the Strait of Hormuz and fresh signals that a diplomatic agreement between Iran and the United States is not imminent.
Brent crude futures rose by $1.28, or 1.4%, to $92.77 per barrel. U.S. West Texas Intermediate (WTI) crude added 76 cents, or 0.9%, to $86.80 per barrel.
New tensions were sparked by a statement from Iran’s security chief that Tehran would not allow “even a single particle of enriched nuclear material” to leave the country. Washington is insisting that nuclear issues be included from the outset in negotiations with Iran to end the war.
Attacks in the Strait of Hormuz continue
The risk to shipping remains the main factor in oil markets. Thirty-seven ships were attacked in the Strait of Hormuz and nearby maritime areas in October. This is the highest monthly number since the start of the war, according to data from the Washington Institute for Near East Policy.
On Tuesday, the British maritime operations organization reported that a tanker had been hit northeast of Oman. Separately, the naval forces of Iran’s Islamic Revolutionary Guard Corps said that two tankers had caught fire after striking sea mines on an “unauthorized route” in the strait. The claims regarding the incidents were presented by the respective institutions and have not been independently verified in the report.
“Even if an agreement is reached, an increase in flows through the waterway will depend on mine clearance, insurance costs and shipowners’ willingness to take the risk,” LSEG’s research unit said.
U.S. inventories also affect the market
Data on U.S. inventories are putting pressure on prices. They increased by 9 million barrels over the past week, according to market sources citing the American Petroleum Institute. Official data are expected later in the day.
Developments surrounding Russia’s oil infrastructure are also affecting the market. A local governor reported a fire in the port area of Ust-Luga following a drone attack that injured three workers. Industry sources claim that Russia’s oil refining capacity has fallen by around 30% since the end of October due to fresh Ukrainian attacks.
Meanwhile, Russian and Ukrainian representatives met in Abu Dhabi for the first peace talks since February. The new diplomatic effort is taking place against the backdrop of attempts by U.S. President Donald Trump’s envoys to end the war.
Sources: reuters.com, investing.com