Oil Extends Rally As Iran Crisis Disrupts Supply Routes

Oil prices continued to rise on Wednesday on signs the war in Iran is expanding into a broader regional conflict.

Benchmark Brent crude futures traded up 2.5 percent at $83.46 a barrel, hitting a 14-month high as the U.S. and Israeli strikes on Iranian targets coupled with retaliatory attacks by Tehran posed threats to energy infrastructure and commercial shipping in the Gulf.

WTI crude futures were up 2.8 percent at $76.66. The conflict widened on Tuesday,
with Israel hitting targets in Lebanon, while Iran stepped up missile and drone attacks in the region, targeting Israel, Saudi Arabia, the United Arab Emirates, Oman and Bahrain.

Iraq — OPEC’s second-largest producer after Saudi Arabia — has cut output by nearly 1.5 million barrels per day, citing export bottlenecks and storage constraints.

Saudi Arabia is also scrambling to shield exports. Qatar has declared force majeure on deliveries following a halt in production in the wake of an Iranian drone strike.

As the conflict threatens global fuel trade, U.S. President Donald Trump said the U.S. Navy ‘will begin escorting’ oil tankers through the Strait of Hormuz, a strategic waterway, if necessary.

Trump also said he had instructed officials to provide political risk insurance and financial guarantees at a reasonable cost to secure maritime trade passing through the Gulf, particularly energy shipments.

Meanwhile, after signaling a prolonged campaign, Trump claimed that the stockpile of ammunition needed for military operations against Iran is at an all-time high.