Oil hits more than 3-week high as Trump tries to raise pressure on Iran
An oil tanker approaches the new Jetty during the launch of the new oil facility in Fujairah, United Arab Emirates, Sept. 21, 2016. AP-Yonhap
NEW YORK — Oil prices rose to more than a three-week high on Thursday after U.S. President Donald Trump warned of retaliation against nations supporting Iran, his latest attempt to resolve a war that has stranded millions of barrels of Middle Eastern oil.
Brent crude futures were up $2.20, or 2.4 percent, to $93.82 a barrel at 11:36 a.m. EDT, while U.S. West Texas Intermediate crude futures for September rose $2.33 to $88.16 a barrel. Both benchmarks hit their highest prices since July 24 and gained for a fifth straight session. The September WTI contract expires later on Thursday.
Trump on Wednesday threatened "economic warfare and isolation on an unprecedented scale" against Tehran, warning of consequences for any country that provided "any type of lifeline to Iran." U.S. Treasury Secretary Scott Bessent said he would hold a press conference on Monday "to talk about exactly what we're going to do."
Thousands of people have been killed in the war, which began nearly six months ago when the U.S. and Israel launched military strikes on Iran. Tehran's blockade of the Strait of Hormuz and Iranian attacks on energy facilities across the Middle East have sharply disrupted the flow of oil and gas to other parts of the world.
"Tensions in the Middle East remain high, leaving room for further supply disruptions," said Giovanni Staunovo, an analyst with UBS. "Lower oil exports from the Middle East are once again tightening the oil market."
Trump's threats against nations helping Iran could potentially become a sensitive topic in U.S.-China relations, as China is the largest importer of Iranian crude oil, said Alex Hodes, an energy analyst at StoneX.
The United Arab Emirates earlier this week suspended all financial and economic transactions with Iran until further notice, refocusing the spotlight on fraught ties between the major Gulf Arab oil producer and Tehran.
Shipping traffic through the Strait of Hormuz on Wednesday was unchanged from the day before, far below pre-war levels, according to the latest shipping data. Prior to the Iran war, shipments equal to about one-fifth of global consumption moved through the waterway.
The war has also impacted the supply of refined fuels and drawn down inventories, with less crude available to refiners. U.S. stockpiles of distillate fuel, including diesel and heating oil, fell last week for a third straight week, the Energy Information Administration said on Wednesday. However, crude inventories unexpectedly rose by 4.4 million barrels.