Oil Prices Jump as Iran Vows to Keep Strait of Hormuz Closed
Oil prices rose Wednesday as Iran’s decision to keep the Strait of Hormuz closed heightened concerns over global supplies, while a decline in US crude inventories provided additional support.
Brent crude futures for October delivery traded at $91.72 per barrel, up 0.8% from the previous close of $91.02. US benchmark West Texas Intermediate (WTI) crude futures for September delivery traded at $84.71 per barrel, up 0.2% from $84.51.
According to Iran’s state news agency IRNA, Iran vowed Tuesday it will not reopen the Strait of Hormuz until the US fulfills its commitments under a memorandum of understanding signed between the two sides.
Speaking during a parliamentary session, Parliament Speaker Mohammad Bagher Qalibaf said Tehran would use both diplomatic and military means to make Washington “understand the consequences of its actions.”
“Let me be clear: until the US fulfills its commitments under the memorandum of understanding — including lifting the blockade, releasing frozen assets, lifting oil sanctions, ending threats and military operations on all fronts, and implementing the other conditions it committed to under the memorandum — the Strait will not reopen,” he said.
Iran and the US signed the memorandum of understanding in June through Pakistani and Qatari mediation, ending hostilities and opening a 60-day window for negotiations toward a final agreement.
Talks have since stalled amid disputes over implementation of the memorandum and arrangements for navigation through the Strait of Hormuz, a critical route for global oil and gas exports.
The prolonged closure of the Strait threatens crude and fuel flows through one of the world’s most important energy transit routes, supporting higher prices.
Meanwhile, on the supply side, market participants also focused on US inventory data.
The American Petroleum Institute (API) estimated that US commercial crude oil inventories fell by 3.3 million barrels last week, against market expectations for a 200,000-barrel increase.
The data provided further support to prices, as the decline in US crude inventories fueled concerns over tightening supply in the world’s largest oil-consuming country.
Investors are now awaiting official inventory data from the US Energy Information Administration (EIA), due later on Wednesday, for further signals on US demand.
On the macroeconomic front, recent signs of weakness in the US economy have also shaped market sentiment.
Weaker US growth and employment data have reduced expectations of further interest rate hikes by the Fed, offering some support to oil prices as lower borrowing costs could bolster economic activity and energy demand.
However, long-term US Treasury yields remain elevated, continuing to weigh on risk assets and limiting gains in crude markets. Oil Prices Inch Higher, Brent Nears $90 on Peace Talks Doubt
