Crude Gains as Strait Security Fears Cap Peace Hopes

Key Moments

Oil Prices Bounce From Two-Month Lows

Oil futures advanced on Wednesday, recovering from the prior session’s two-month trough as traders weighed prospects for easing tensions between the United States, Israel and Iran against persistent threats to maritime traffic through the Strait of Hormuz.

By 0730 GMT, Brent futures were up 52 cents, or 0.6%, at $92.01 a barrel, while US West Texas Intermediate (WTI) crude added 16 cents, or 0.2%, to $86.20.

Hormuz Shipping Attacks Keep Risk Premium Elevated

Market sentiment remained fragile amid ongoing assaults on commercial vessels in key Gulf shipping corridors. Recent figures indicated that there was little evidence of a slowdown in attacks in November, following 37 ships being struck in October. That was the highest monthly total since the onset of the Middle East war, based on data from the Washington Institute for Near East Policy.

“There has been an increase of vessel attacks in the Gulf shipping lanes amidst uncertainty of the diplomacy talks,” said June Goh, senior analyst at Sparta Commodities.

Goh noted that political developments were also influencing price dynamics. “With the US midterms well over and more crude flows out of the Middle East, there seems to be more bearish tones to the oil price.” She highlighted that the central factor for crude markets is “the extent to which Iran will come to the table with US demands to reach a diplomatic agreement.”

Latest Incidents in Oman and the Strait of Hormuz

The security backdrop was further strained by fresh reports of tanker damage. A tanker was struck northeast of Lima in Oman, the United Kingdom Maritime Trade Operations agency said on Tuesday.

In a separate statement on Tuesday, Iran’s Revolutionary Guards Navy reported that two tankers caught fire after contacting naval mines on what it described as an “unauthorized route” in the strait.

LSEG Oil Research underscored that risks would likely remain elevated even if a political breakthrough were achieved. “Even in the event a deal is struck, an increase in flows through the waterway would still depend on mine clearance, insurance costs and whether or not shipowners would even be willing to take the risk,” LSEG Oil Research said in a November 10 note.

Price Swings Driven by Diplomatic Signals

In the previous trading session, crude benchmarks initially dropped by more than $3 per barrel after US officials signaled there was no immediate need for additional military action against Iran. Some of that decline was later reversed after an Iranian security official countered that no discussions were under way between the two sides.

US Inventory Build Adds to Bearish Factors

On the fundamentals side, a significant rise in US crude inventories added another potential headwind for prices. Market participants, citing data from the American Petroleum Institute, said that US crude stocks increased by 9 million barrels in the week ended November 6.

Russian Energy Infrastructure and Regional Security Developments

Geopolitical risks were not confined to the Middle East. A regional governor in northwest Russia said on Wednesday that a drone strike ignited a fire in the port area of Ust-Luga on the Baltic Sea, injuring three workers.

Industry sources indicated that Russia’s oil refining capacity has been cut by about 30% since late October following renewed Ukrainian drone attacks.

Amid these developments, Russian and Ukrainian officials met in Abu Dhabi on Tuesday for their first peace talks since February, as US President Donald Trump’s envoys initiated a new effort to bring the conflict to an end.