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ConflictOil prices slip ~1% despite renewed US-Iran strikes and drone attack on tanker
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Crude oil prices slipped about 1% on Wednesday, with Brent at $89.46 and WTI at $83.54, as traders focused on reports that oil tankers continued to pass through the Bab el-Mandeb Strait despite escalating conflict. The U.S. Central Command announced renewed strikes on Iranian targets in response to attempted Iranian attacks on U.S. forces. Iran fired missiles at U.S. troops in Jordan, while U.S. and Saudi forces struck Iran-aligned groups in Iraq planning to target Saudi energy infrastructure. Egypt confirmed a drone strike on a U.S.-owned LNG tanker at the Damietta port. Ship-trackers noted 39 commodity carriers exiting the Bab el-Mandeb on Tuesday, though Strait of Hormuz traffic remained subdued. Analysts from IG Group and ING highlighted that alternative routes are eroding Iran's leverage over Hormuz, but the risk of prolonged supply disruptions, especially in middle distillates, is growing as Saudi oil infrastructure is increasingly targeted.
Source report
Crude oil prices edged lower on Wednesday, as reports emerged that oil tankers continued to pass through the Bab el-Mandeb Strait, despite renewed U.S.-Iran strikes and a drone attack on a tanker at an Egyptian port.
At the time of writing, Brent crude was trading at $89.46 per barrel, and West Texas Intermediate (WTI) stood at $83.54 per barrel—both down approximately 1% since Wednesday’s close.
U.S. and Iran Exchange Strikes
The U.S. Central Command announced renewed strikes on targets in Iran on Wednesday, describing the action as "a powerful response to yesterday's attempted Iranian attacks on U.S. forces based in the Middle East," according to Reuters.
Iran retaliated by firing missiles at U.S. troops in Jordan. Meanwhile, U.S. and Saudi forces attacked Iran-aligned military groups in Iraq, which were reportedly planning to strike Saudi energy infrastructure.
Drone Attack on Tanker in Egypt
Egypt confirmed reports of a drone strike on a U.S.-owned tanker used for floating storage at the port of Damietta. Later reports identified two tankers involved, both carrying liquefied natural gas. Damietta is a key LNG terminal in Egypt.
Traders Focus on Tanker Movements
Despite the heightened tensions, traders focused on reports that tankers were still leaving the Middle East. Ship-trackers noted 39 commodity carriers exiting the Bab el-Mandeb Strait on Tuesday, even as traffic through the Strait of Hormuz remained subdued.
"While overall volumes are reduced, oil continues to leak out of the region through multiple channels, and additional workarounds are being explored. The longer this situation persists, the more these alternative routes and methods will erode Iran's leverage over the Strait of Hormuz." — Tony Sycamore, IG Group analyst, as quoted by Reuters
Supply Disruption Risks Remain
ING commodity strategists warned in a note on Wednesday that the risk of prolonged supply disruptions is growing, particularly as Saudi oil infrastructure faces increasing attacks. They noted that this risk is especially pronounced in middle distillates, and that crack spreads continue to break records.
By Irina Slav for Oilprice.com
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U.S.-Iran Agreement to Reopen Strait of Hormuz Sends Oil Prices Plunging