WASHINGTON (dpa-AFX) - Crude oil prices have catapulted on Wednesday, partially offsetting the losses from three consecutive sessions following a sudden reversal in the gulf situation after Iran launched surprise attacks on U.S. bases in Jordan while joint U.S.-Saudi Arabian forces targeted Iran-linked militants in Iraq.
WTI Crude Oil for September month delivery was last seen trading up by $5.55 (or 7.00%) at $84.81 per barrel.
The Middle East crisis, which began on February 28 after U.S.-Israeli forces attacked Iran, is alternating between a ceasefire and a fresh conflict.
Efforts by intermediaries to bring both the U.S. and Iran to the negotiating table have stalled.
The Memorandum of Understanding signed between the U.S. and Iran on June 17 was rendered void after Iran fired at ships transiting through the Strait of Hormuz.
This prompted U.S. forces to conduct strikes on several military targets across Iran. In retaliation, Iran launched strikes on U.S. bases across the gulf.
The mutual exchange of attacks went on for nearly two weeks. U.S. forces conducted strikes on Iran for 13 consecutive nights. The escalation triggered oil prices to retrace the gains seen before the signing of MoU.
Last Friday, U.S. President Donald Trump warned of fierce attacks on Iran at a level never seen before.
Hours before the attacks were to resume, Trump ordered a halt on attacks. Iran assured to stop its offensives as long as the U.S. refrains from hitting them. For four consecutive nights, the Middle East remained calm.
However, today U.S. Central Command announced successfully intercepting and destroying several ballistic missiles sent by Iran targeting U.S. bases in Jordan. Iran's Islamic Revolutionary Groups Corps admitted to firing the missiles.
Following this fresh breakout, Trump vowed to hit Iran harder but acknowledged that talks between the U.S. and Iran are still happening.
Separately, U.S.-Saudi Arabian forces jointly targeted Iran-linked rebel groups in Iraq in coordination with the Iraqi government. The Strait of Hormuz still remains shut by Iranian authorities.
The fresh conflict after less-than-a-week of lull in the gulf pushed crude oil prices more than 6%.
As of July 27, according to S&P Global, the vessel traffic through the Bab el-Mandeb and Strait of Hormuz seaways remained at 32 and 25, respectively. Nearly 47 million barrels of crude oil from Iran are held aboard tankers in the Middle East.
As of July 28, the ship-tracking data from Kpler revealed that 39 vessels transited the Bab el-Mandeb whereas only 8 commodity ships transited through the Strait of Hormuz.
Recently, Yemen's Houthi (Iran-backed rebel group) militants announced a naval blockade on Saudi Arabian vessels through the Red Sea. Later, the Houthis attacked two vessels linked to Saudi Arabia.
On the inventory front, yesterday Reuters reported that the Organization of Petroleum Exporting Countries is planning to pause crude oil output hikes for three months from October.
Reportedly, at their upcoming August 2 meeting, the cartel is planning to announce an output target increase by nearly 188,000 barrels per day for September.
According to the data from American Petroleum Institute, U.S. crude oil inventories unexpectedly increased by 3,300,000 barrels for the week ending July 24, defying market expectations for a 2,500,00-barrel draw
According to the U.S. Energy Information Administration, for the week ending July 24, crude oil inventories decreased by 7,167,000 barrels compared with market expectations for a 1,300,000-barrel draw. The sharp decline has drawn the attention of analysts.
At Cushing's Oklahoma Delivery Hub, inventories decreased by 771,000 barrels to a nearly 12-year low.
For the same period, while gasoline inventories increased by 7,000 barrels, distillate inventories increased by 1,062,000 barrels, and heating oil inventories increased by 308,000 barrels.
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