ISLAMABAD: Global oil prices hovered near five-month highs on Wednesday as Houthi attacks on energy infrastructure and vessels heightened supply concerns, offsetting hopes for progress in Russia-Ukraine peace talks and mixed US petroleum inventory data.
Brent crude futures rose 27 cents, or 0.2%, to $109.04 a barrel by 1450 GMT, while US West Texas Intermediate (WTI) crude slipped 11 cents, or 0.1%, to $97.72. Both benchmarks had gained as much as $2 earlier in the session, with Brent trading near its highest level in five months.
In the previous session, Brent reached a five-month peak, while WTI touched a six-month high before retreating on reports of mediation efforts involving Iran and Pakistan.
Market participants remained concerned about continued attacks on shipping in and around the Strait of Hormuz, a critical route for global oil supplies. At least two additional vessels were reportedly struck overnight, adding to fears that further escalation could disrupt crude shipments and energy infrastructure across the Gulf.
Dennis Kissler, senior vice president of trading at BOK Financial, said crude futures were moving around unchanged levels but remained below their overnight highs as attacks in the Strait of Hormuz continued.
Data from Kpler showed that at least 18 vessel attacks had been recorded over the preceding two weeks. Analysts at LSEG warned that Iran was targeting tankers beyond the Strait of Hormuz, extending the risk into the Gulf of Oman and threatening crude loadings and ship-to-ship transfers that support regional oil exports.
The Houthis claimed responsibility on Monday for attacks on a Saudi Aramco facility in Yanbu, the Shaybah oilfield and airports in Riyadh and Abha, further intensifying concerns over the security of regional energy infrastructure.
Geopolitical uncertainty was compounded by a lack of progress in US-Iran dialogue. Iranian Foreign Minister Abbas Araqchi told the Financial Times that Tehran was fully prepared to defend itself, while President Masoud Pezeshkian said the United States could not expect dialogue while maintaining a blockade and issuing threats.
At the same time, prospects for renewed Russia-Ukraine peace talks offered some relief to oil markets. The Kremlin said Russian President Vladimir Putin had agreed to resume US-mediated talks with Ukraine as soon as next month following a meeting with US envoy Steve Witkoff.
Market participants are watching the negotiations closely because a potential peace agreement could ease restrictions on Russian energy supplies and improve the availability of diesel, which has been a major factor supporting crude prices in recent weeks.
US petroleum inventory data also influenced prices. Crude oil stocks fell by 3.06 million barrels to 412.5 million barrels last week, according to the US Energy Information Administration (EIA), substantially exceeding analysts’ expectations of an 820,000-barrel decline.
However, distillate inventories, which include diesel and heating oil, increased by 1.68 million barrels to 104.3 million barrels. Analysts had expected a decline of 1.16 million barrels, making the increase a potentially bearish signal for diesel markets.
In a further effort to contain fuel prices, the US Department of Energy said the Trump administration was offering to lend up to nearly one-third of the country’s one-million-barrel emergency heating oil reserve. The move comes as diesel shortages linked to the conflicts involving Iran and Ukraine have pushed fuel prices higher.
Two US Energy Department officials said on Tuesday that the department was also working with refiners worldwide to increase fuel production.
Oil markets remain caught between the risk of further supply disruptions in the Middle East and the possibility that diplomatic progress could ease pressure on global energy supplies. Continued attacks on vessels and energy infrastructure could sustain the upward pressure on crude prices, while a breakthrough in peace talks could temper concerns over supply shortages.