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Oil jumps more than 3% to near six-week high on strait threats
Brent’s three-month timespread widened to $9.26 a barrel, deepening backwardation amid increased shipping risks through the Strait of Hormuz and Bab el-Mandeb.
Oil prices rose sharply to their highest level since June 11, driven by mounting supply concerns as tensions between the United States and Iran escalated, Reuters reported. Brent crude futures settled up $3.06, or 3.36%, at $94.07 a barrel, after reaching a session high of $95.47.
The market also saw a boost from threats by the Iran-aligned Houthi militia in Yemen, which raised worries about shipping through key waterways, Reuters said. The Brent three-month timespread expanded to $9.26 a barrel, its widest since May 22, signaling deeper backwardation where prompt crude trades above later-dated barrels and typically points to tighter near term supply.
Reuters added that the U.S. military said it conducted an 11th consecutive night of attacks on Iran, and the Kuwaiti army said its air defences were intercepting Iranian drones. In parallel, ships linked to Israel, the United States or Saudi Arabia were advised to avoid voyages through the Red Sea and Gulf of Aden, and five tankers reportedly changed course in the Red Sea to avoid the Bab el-Mandeb Strait.
The story also noted that the Bab el-Mandeb route has become more important for Saudi crude exports as traffic through the Strait of Hormuz has fallen again since a ceasefire between the United States and Iran collapsed earlier this month, Reuters reported. Traders are closely watching shipping numbers in the Red Sea as the disruption risk widens beyond the Hormuz waterway.
Latest closeWTI crude $92.23 ▲6.2%|Brent $100.54 ▲6.9%