Oil prices climbed on Wednesday after two vessels were struck in the Strait of Hormuz. Iranian officials told Reuters they were deploying new tactics to target ships. Tehran reportedly seeks to keep oil prices high and influence the United States midterm elections.
Brent crude futures rose 34 cents, or 0.3 percent, to $106.03 a barrel by 09:30 a.m. Saudi time. United States West Texas Intermediate crude futures gained 28 cents, or 0.3 percent, to reach $94.42 a barrel. Both contracts had climbed more than $1 in early trade.
Iranian officials declined to provide details of the new strategy. One official said that Iran had started using different offensive tactics against vessels it considered in violation of its restrictions about 10 days ago, leading to an increase in attacks on such ships.
A container ship and a tanker were hit by unknown projectiles within the Strait of Hormuz. The UK Maritime Trade Operations reported the incident on Tuesday.
Priyanka Sachdeva, head of market insights at Phillip Nova, commented on the situation. She said the fact that Iranian officials are openly admitting to undermining United States efforts to keep oil prices under control shows the real intentions behind the peace talks.
Sachdeva said Iran is well aware of its geographical importance and the havoc higher oil prices can inflict on the global economy. Tehran may not shy away from using this leverage.
Elsewhere, the Iran-allied Houthis attacked an administrative building belonging to state-owned oil firm Saudi Aramco in the city of Dhahran. Saudi Arabia’s energy ministry said on Wednesday the strike caused a limited fire.
The group has fired ballistic missiles and drones at Saudi Arabia over the past week in retaliation for the Kingdom’s support of Yemeni government forces. Riyadh’s international airport has been hit four times, including a strike on Saturday that killed 13 people.
Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, spoke on market drivers. He said supply concern stemming from conflict between the Houthis and Saudi Arabia is driving prices higher.
Kikukawa also mentioned that the expectation of increased Russian diesel exports easing market tightness will likely limit sharp price movement in either direction. He projected West Texas Intermediate to trade between $90 and $100 a barrel.
