Oil extended gains after President Donald Trump played down the prospect of near-term talks with Iran while threatening broader strikes, as risks to global supply spread beyond the Middle East to the Black Sea.
Brent rose to trade around $92 a barrel, climbing for a fourth day, while West Texas Intermediate was above $85. Trump vowed to respond if Tehran-backed Houthi rebels in Yemen disrupted shipping in the Red Sea and reiterated threats to strike soon at Pickaxe Mountain, a suspected Iranian nuclear site.
The American military conducted an 11th straight day of attacks on the Islamic Republic in an effort to degrade the country’s abilities to threaten commercial shipping in the Strait of Hormuz, according to US Central Command. The waterway remains open, despite Iranian aggression, it added.
Oil futures have rallied this month as the US and Iran escalated hostilities across the Middle East, with three tankers attacked in recent days in Hormuz near Oman. Beyond the region, the market is also contending with a spate of attacks at the Caspian Pipeline Consortium terminal on Russia’s Black Sea coast, which ships most of Kazakhstan’s crude.
On Tuesday, Trump said Iran “want to desperately meet,” adding that the US has no interest. Tehran dismissed claims that it’s seeking talks. Crude has repeatedly swung on the prospects for escalation and détente.
“Our view is that we’ll be kind of in this $80 to $90 range, depending on the news flow,” said Jay Hatfield, chief executive of Infrastructure Capital Management LLC. “If we actually have a closed Red Sea, that’s a threat. We haven’t seen that yet. That could shoot us over $100.”
The Houthi threat to Saudi Arabia’s maritime traffic has started to have some impact. Some tankers appeared to pause as they approached Yemeni waters, while others carrying oil from the kingdom reversed course and headed toward the Suez Canal. Still, other vessels continued to move toward the area.
The Red Sea became a crucial export route for Saudi Arabia during the war, allowing the kingdom to redirect some flows via pipelines and bypass Hormuz. Observed commercial vessel traffic through the narrow waterway near Iran has fallen to the lowest level in three weeks.
Brent could breach $100 a barrel before year-end if the Middle East conflict drags on and commercial inventories across the Organisation for Economic Co-operation and Development draw further, according to a note from Bernstein. Goldman Sachs Group Inc. has also flagged the possibility of prices returning to triple digits, although that’s not the bank’s base case.
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