Oil prices climbed Wednesday after two vessels were struck in the Strait of Hormuz and Iranian officials told Reuters they were deploying new tactics to target ships, as Tehran seeks to keep oil prices high and influence the U.S. midterm elections.
Brent crude futures rose 63 cents, or 0.6%, to $106.32 a barrel by 0345 GMT, while U.S. West Texas Intermediate crude futures gained 66 cents, or 0.7%, to $94.80 a barrel. Both contracts rose more than $1 in earlier trade before paring some gains.
The Iranian officials declined to provide details of the new strategy, but one said Iran had started using different offensive tactics against vessels it considered in violation of its restrictions about 10 days ago, adding that this had led 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 United Kingdom Maritime Trade Operations said Tuesday.
"The fact that Iranian officials are openly admitting to undermining U.S. efforts to keep oil prices under control speaks volumes about the real intentions behind the so-called 'peace talks,'" said Priyanka Sachdeva, head of market insights at Phillip Nova. "Iran is well aware of its geographical importance and the havoc higher oil prices can inflict on the global economy, and it may not shy away from using this leverage."
Elsewhere, the Houthis attacked an administrative building belonging to state-owned oil firm Saudi Aramco in the city of Dhahran, causing a limited fire, Saudi Arabia's energy ministry said Wednesday. 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, with a strike Saturday killing 13 people.
"Supply concern stemming from conflict between the Houthis and Saudi Arabia is driving prices higher," said Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, a unit of Nissan Securities.
"However, the expectation that increased Russian diesel exports will ease market tightness is likely to limit sharp price movement in either direction," Kikukawa said, projecting WTI to trade between $90 and $100 a barrel.
Last month, Saudi Arabia raised oil production despite disruptions to shipments caused by the U.S.-Iran war. That led to a sharp production increase from OPEC+ — the Organization of the Petroleum Exporting Countries and partners including Russia — OPEC said Tuesday.
In Russia, the government said Tuesday it did not see any direct link between peace talks with Ukraine and its deal to export diesel to the U.S.
