Iran Crisis Pushes Brent to 3-Week High
Oil prices surged during Thursday's trading (August 20), reaching a three-week high driven by concerns that the standoff involving Iran would continue to disrupt supplies from the Middle East. The Brent contract for October delivery rose approximately 3.1% to US$94.42 per barrel, while September WTI strengthened to US$88.67 per barrel. Both benchmarks recorded gains for the fifth consecutive session.
Bullish sentiment intensified after the United Arab Emirates decided to halt all financial and economic transactions with Iran until further notice. This move further highlighted the deteriorating relationship between Tehran and a key oil producer in the Gulf region.
US-Iran tensions also showed no signs of easing. US President Donald Trump had previously stated that no talks were underway with Iran and insisted the Strait of Hormuz remained open. However, Tehran offered a different account, claiming the waterway remained closed. Trump also warned of economic consequences for any nation providing support to Iran.
Shipping activity through the Strait of Hormuz remains very low compared to pre-war levels. Before the conflict began in late February, the waterway handled oil volumes equivalent to about one-fifth of global consumption. Limited tanker traffic has caused the market to continue pricing in a significant geopolitical risk premium.
Supply disruptions are also becoming apparent in refined products. Data from the Energy Information Administration showed US distillate stocks—including diesel and heating oil—falling for the third consecutive week. However, US crude oil inventories unexpectedly rose by 4.4 million barrels, a factor that could potentially limit further rallies.
Newsmaker Analysis: Oil momentum remains strongly bullish as long as the standoff in Hormuz and the Iran conflict persist. With Brent having breached the US$94 mark, there is potential to test the US$95 area—or even higher levels—should supply flows face further disruption. However, following five consecutive sessions of gains and a rise in US crude inventories, the risk of profit-taking remains a factor to watch should signs of de-escalation emerge. (arl)
Source: Newsmaker.id
