Oil prices rose on Wednesday from two month lows as attacks on shipping in the Strait of Hormuz offset optimism over a possible de-escalation of the Iran war. Brent futures climbed 71 cents, or 0.78 percent, to 92.20 a barrel, while United States WTI crude gained 49 cents to 86.53 dollars, as the market swung between truce hopes and shipping fears.
Why it matters
The attacks are the reason the rebound came. Thirty seven ships were attacked in the Strait of Hormuz and surrounding waterways in October, the highest monthly tally since the war began, according to the Washington Institute for Near East Policy, and another 10 attacks have been recorded so far in November. A tanker was struck northeast of Oman Lima on Tuesday, and Iran Revolutionary Guards Navy said two tankers caught fire after hitting naval mines. India has demanded safe, free and unimpeded navigation through the strait, and the Abu Dhabi talks have entered a second day.
The truce hopes are real but fragile. President Donald Trump said on Monday he plans to hold off on new strikes against Iran for now, crude hit two month lows on Tuesday, and Brent had dipped below 90 dollars for the first time since late August. But the market keeps learning the same lesson: a pause in bombing is not a pause in the shipping war.
What happens next
The wider energy picture is tightening from both sides. Iran security chief said Tehran would not allow even a single particle of enriched nuclear material to leave the country, and Russian oil refining capacity has been reduced by about 30 percent since late October following renewed Ukrainian drone attacks. The supply risks are stacking up even as demand worries grow.
What happens next will be decided by whether the attacks ease or the diplomacy catches up. The Abu Dhabi talks entered a second day on Wednesday, and India has demanded safe, free and unimpeded navigation through the strait. For now, the price says the market believes the tankers more than the talks. Brent had dipped below 90 dollars for the first time since late August before the attacks pushed it back above 92 dollars, and WTI gained 49 cents to 86.53 dollars.
