Oil benchmarks reach highest since late July amid US-Iran strikes

Both crude benchmarks reached their highest since late July due to the fresh US-Iran confrontation, but the price moves have been two-sided, not a clear breakout. Brent appears to be hitting resistance near current prices, an area that stopped advances twice earlier this year—in early June and around July 23. Bulls need a definitive close above that zone to confirm the recent rally is more than a bounce. A bigger-than-expected drop in US crude inventories provides a bullish fundamental component in addition to the geopolitical risk premium. Trader comments indicate the market has largely factored in that alternative supply routes can mitigate short-term Strait of Hormuz disruptions, potentially limiting the extent of the price response. As OPEC+ is anticipated to maintain its production strategy unchanged for October, the short-term price direction will probably remain driven by news headlines, following the conflict's fluctuations rather than any change in underlying supply-demand fundamentals.

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Earlier:

• US crude oil stocks fell by 4.450 million barrels last week, far exceeding the 1.085 million barrel draw that was forecast.

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Crude prices climbed to their highest in more than a month following fresh US-Iran strikes, but they are now encountering resistance that halted rallies on two previous occasions this year.

Summary:

• Brent ended the session about 1% up, while WTI gained nearly 0.9%, pushing both contracts to their strongest since roughly July 24.
• The confrontation between the US and Iran has entered its seventh month. Wednesday's strikes were called the largest escalation since July; the US hit Iranian radar and mine-laying equipment, and Iran struck US positions in response.
• The chart indicates Brent is encountering resistance near present prices, a region that also contained advances in early June and around July 23.
• Iran stated it is open to talks but requires the US to meet its obligations before the Strait of Hormuz can reopen. A US official described the strikes as pre-emptive, aimed at a supposed plot against submarine cables in the strait.
• President Trump said the strikes hit an Iranian rocket and mine program, indicated the intensified campaign would be brief and that oil prices would fall, but also stated he is ready to strike again if needed.
• Shipping data revealed roughly four commodity vessels passed through the Strait of Hormuz, far fewer than the ten-day average of about 13. Two tankers were disabled after hitting sea mines.
• US Energy Secretary Chris Wright stated about 17 million barrels moved through Hormuz on Monday, which he termed the highest daily volume since the conflict started. Iraq has boosted exports, with shipments expected to rise more in September.
• US crude stocks dropped about 4.5 million barrels last week, significantly exceeding the anticipated decline of roughly 1.1 million barrels, per EIA data. Gasoline stocks had a smaller-than-expected draw, and distillate inventories unexpectedly increased.
• OPEC+ is likely to keep its production policy steady for October during Sunday's meeting, as the group completes the removal of one round of output cuts and shifts attention to 2027 quota discussions.
• Russia launched a significant missile and drone assault on energy facilities in Ukraine's Odesa region overnight, reported grid operator Ukrenergo.

Brent crude ended about 1% higher on Wednesday, capping a turbulent session triggered by the most substantial US-Iran exchange of strikes in weeks, as the seven-month-old conflict displayed new escalation signs. Brent futures closed near $95 a barrel, while US West Texas Intermediate rose around 0.9% to roughly $91. Both contracts fluctuated between gains of about $2 a barrel and losses of roughly $1 during the session, with intraday highs reaching the strongest level since around July 24 for each.

Chart analysis shows Brent facing resistance near current prices, a region that halted advances twice in 2023—once in early June and again around July 23. A clear close above that zone is necessary for the current upswing to be seen as more than a mere bounce inside the wider range that has shaped trading since spring.

The most recent strikes saw US forces hit Iran's southern coast, focusing on radar and mine-laying installations. Iran retaliated against US positions around the region. Analysts called this a significant uptick after roughly a month of quiet. Iran indicated it does not oppose talks but insists the US must meet its commitments before taking steps to reopen the Strait of Hormuz. A US source said the strikes were pre-emptive, aimed at an alleged Iranian plot targeting submarine cables. President Trump said the action responded to Iran's attempts to build a mine-dropping rocket, and while he predicted the intensified campaign would be short and prices would decline, he also said he is ready to strike again. Saudi Arabia's foreign ministry called for calm and a return to negotiations.

Shipping data highlighted the disruption: only about four commodity ships passed through the Strait of Hormuz on Wednesday, a sharp drop from the ten-day average of roughly 13. Two oil tankers were disabled after hitting mines. Iran added more vessels to a list of those it considers non-compliant, subjecting them to fines or seizure. Despite this, US Energy Secretary Chris Wright countered the disruption narrative, stating that around 17 million barrels traversed the strait on Monday, the highest volume since the conflict began. Iraq has increased exports, with further gains expected in September as profit margins widen and Iranian tanker approvals encourage buyers.

Fundamentally, US crude stocks declined about 4.5 million barrels last week, far more than the roughly 1.1 million barrel draw predicted, per EIA data. Gasoline inventories had a smaller-than-expected fall, and distillates unexpectedly rose. OPEC+ is broadly expected to keep its production setup unchanged for October at Sunday's meeting, as it finishes unwinding one set of cuts and focuses on 2027 quota talks. Separately, Russia conducted a major missile and drone attack on energy infrastructure in Ukraine's Odesa region overnight, reported Ukrenergo, adding to the supply-side risks facing the market.