Oil prices settled at their highest levels since June 11 on Wednesday as growing concerns over global crude supplies intensified following the escalating conflict between the United States and Iran and threats by Yemen’s Houthis to target commercial shipping.
Brent crude futures climbed $3.06, or 3.36%, to settle at $94.07 per barrel, their highest closing level in nearly six weeks, after reaching an intraday high of $95.47.
Meanwhile, U.S. West Texas Intermediate (WTI) crude rose $2.49, or 2.95%, to settle at $86.83 per barrel.
The Brent forward spread between the front-month contract and the contract expiring three months later widened to $9.26 per barrel, its highest level since May 22. The widening backwardation—where prompt contracts trade at a premium to later deliveries—is widely viewed as a sign of tightening near-term supply.
The U.S. military announced it had carried out airstrikes against Iran for the 11th consecutive night, shortly after Kuwait’s military said its air defenses had intercepted Iranian drones.
U.S. President Donald Trump warned on Wednesday that the United States would “bomb and destroy a bridge or a power station” in Iran whenever Tehran targets a vessel in the Strait of Hormuz.
Meanwhile, a spokesperson for Iran’s Islamic Revolutionary Guard Corps (IRGC) warned shipping companies in a post on X about the presence of mines along the southern shipping lane of the Strait of Hormuz.
The exchange of threats has heightened fears of further disruptions to global energy supplies after the Houthis, who are aligned with Iran, opened a new front in the conflict by threatening vessels carrying Saudi crude through the Bab el-Mandeb Strait and announcing a maritime blockade on Saudi Arabia.
The European Union’s Aspides naval mission warned on Wednesday that vessels linked to Israel, the United States, or Saudi Arabia face an elevated risk of Houthi attacks and advised them to avoid sailing through the Red Sea and the Gulf of Aden.
“The energy market is now facing concerns over two strategic chokepoints,” said Tim Waterer, Chief Market Analyst at KCM Trade. “Bab el-Mandeb appears poised to join the Strait of Hormuz as another geopolitical flashpoint, while traders closely monitor shipping activity in the Red Sea.”
The Bab el-Mandeb Strait, located at the southern entrance to the Red Sea, has become increasingly important for Saudi crude exports as traffic through the Strait of Hormuz has declined sharply following the collapse of the U.S.-Iran ceasefire earlier this month.
Five oil tankers altered their routes in the Red Sea on Wednesday to avoid the Bab el-Mandeb Strait following Houthi warnings.
As a result of the security risks, Asian refiners have reportedly begun seeking Saudi crude shipments from the Yanbu export terminal on the Red Sea, routing cargo through the Suez Canal and around the Cape of Good Hope.
“The Houthi threat has forced oil tankers to reroute, increasing pressure on the physical oil market and Saudi exports, which is contributing to higher prices,” said Frank Walbaum, market analyst at Naga.com.
Separately, the U.S. Energy Information Administration (EIA) reported that U.S. crude oil inventories increased during the week ending July 17, as refinery activity slowed, crude exports declined, and imports increased.
Crude stockpiles rose by 2 million barrels to 411.7 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.1 million-barrel decline.
Source: Reuters
