WTI Erases Losses, Hits Fresh Three-Month Highs Near $92.70 as Gulf Hostilities Escalate

West Texas Intermediate erased earlier losses on Wednesday and printed fresh three-month highs as Middle East hostilities intensified.

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WTI retraced previous losses to hit fresh three-month highs at $92.70, with the early-June highs of $94.87 in sight. Crude maintained a firm tone as the Middle East risked escalating into a wider regional war.

Drivers

Tuesday’s US–Iran attack exchange, Iran-backed Houthi strikes on Saudi oilfields, and Saudi retaliatory strikes in Yemen sit on the same Gulf tape already live as CENTCOM five carriers and Saudi energy halt / Brent ~$98. Asia oil’s Brent-near-$100 wire split is the prior Asia session.

Shipping / $120 risk

Attacks on vessels in the Strait of Hormuz keep oil traffic limited in a waterway that used to carry about 20% of global supply before the war. Rabobank: “maritime nations are warning that global shipping rules are collapsing, which could take much global trade with it as some worry if there is enough bunker fuel for the ships to use.” The bank notes “the Suez Canal (…) seeing more passages as tankers try to avoid Hormuz,” even as the “Panama Canal is warning of deeper transit cuts as the El Niño drought threat intensifies.”

Earlier this week, Goldman Sachs co-head of global commodities research Dean Struyven warned oil prices might reach $120 per barrel in a Bloomberg TV interview, citing “the risk of shipping disruptions broadening and intensifying.”

Also see: AUD/USD Hits Fresh Four-Month Highs at 0.7237 on USD Weakness, China CPI Rebound.

Also see: Brent Clears $100 for First Time Since July 24 as Gulf Conflict Escalates.

Also see: Ukraine Drone Attack Kills Four in Novorossiysk; CPC Report Thin, Fuel Oil Terminal GEOINT Separate.

Also see: Silver Rebounds Near $67.50 as USD Weakness Clashes With Rising Fed Hike Bets.

Also see: WTI NY Extends to ~$93.85, Highest in Three Months as Middle East Escalation Threatens Supply.

Also see: WTI Falls Below $93.50 to ~$93.20 on Profit-Taking; US–Iran Tensions Cap Downside.

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