Oil prices were volatile on Wednesday, as ships were once again targeted in the Strait of Hormuz and renewed fighting between Saudi Arabia and Yemen’s Houthis spurred more concerns over supply disruptions in the Middle East.
Brent oil futures dipped 0.2% to $105.50 a barrel by 09:11 ET (13:11 GMT), retreating from earlier gains. U.S. West Texas Intermediate crude futures rose 1.4% to $95.43 per barrel.
Shipping through the Strait of Hormuz also remained constrained after reports this week said more ships have been hit by missiles while attempting to cross the waterway. The United Kingdom Maritime Trade Operations authority said at least two ships were struck in Hormuz on Tuesday.
Iran has largely shuttered Hormuz for months in response to a joint U.S.-Israeli assault which began in late February, cutting off a shipping conduit through which roughly a fifth of the world’s oil and liquefied natural gas flowed before the war.
Iran is preparing to deploy new tactics to target vessels in Hormuz as part of a bid to keep oil prices elevated ahead of the U.S. midterm elections in November, according to Reuters.
Polls have suggested that candidates from U.S. President Donald Trump’s Republican Party may face voter backlash to a recent energy shock spurred on by the Iran war. A run-up in oil prices in September is also likely to contribute to a “strong” reading of the month’s U.S. consumer price index due out later today, analysts at Deutsche Bank said in a note.
Meanwhile, worries have abounded that the fighting in the Middle East is now spreading beyond Iran, potentially further constraining Gulf oil supplies.
Yemen’s Iran-backed Houthis launched a wave of missiles at Saudi Arabia on Tuesday, targeting major cities, as well as state-owned company Saudi Aramco’s facilities. Aramco’s headquarters in Dhahran were struck in the latest attacks, although only a limited fire was reported in the facility.
Earlier this week, Saudi authorities temporarily shuttered operations at Riyadh’s international airport following recent strikes.
The Houthis have ramped up their targeting of Saudi infrastructure in recent weeks. Saudi-led coaltion government forces in Yemen launched a new offensive earlier this month aimed at retaking Houthi-controlled areas of the country, including territory dominating the Bab el-Mandeb Strait, a critical oil shipping chokepoint.
Elsewhere, investors were monitoring oil production in the U.S. Gulf Coast, after the region was battered by a hurricane that saw over 60% of production taken offline.
Source: Investing.com