Oil Rebounds as Hormuz Shipping Attacks Dent Truce Hopes

Oil prices rebounded on Wednesday as attacks on shipping in the Strait of Hormuz weighed on hopes for an Iran truce, according to Reuters. Brent crude rose $1.04, or 1.1%, to $92.53 a barrel at 0420 GMT, and US West Texas Intermediate (WTI) rose 67 cents, or 0.8%, to $86.71. Both recovered from the previous session’s two-month lows.

Shipping Attacks

According to data from the Washington Institute for Near East Policy, 37 ships were attacked in October, the highest monthly total since the Middle East war began, and attacks show little sign of slowing in November. UKMTO reported a tanker struck northeast of Lima, Oman, on Tuesday. Iran’s Revolutionary Guards Navy said two tankers caught fire after hitting naval mines on an “unauthorized route” in the strait.

Swings on Diplomacy

On Tuesday, oil initially fell by more than $3 a barrel after US officials downplayed the need for further strikes. Part of the losses were recovered after an Iranian security official said no talks were taking place.

Analysts’ View

June Goh of Sparta Commodities said vessel attacks in Gulf shipping lanes have increased amid uncertain diplomacy, and that Iran’s willingness to engage with US demands is the main price driver. LSEG Oil Research said that even if a deal is reached, any increase in flows through the waterway would still depend on mine clearance and insurance costs.

Other Market Factors

US crude stocks rose by 9 million barrels in the week ended November 6, according to American Petroleum Institute data.