Middle East Tensions Fuel Oil Price Surge

Brent crude traded at $82.84 per barrel, up 2.5% from $80.76, while WTI increased 2.6% to $76.53 per barrel from $74.59. US Treasury Secretary Scott Bessent announced new measures, including political risk insurance from the US International Development Finance Corporation (DFC) for vessels in the Persian Gulf, and stated the US Navy will escort tankers through the Strait of Hormuz to ensure free flow of energy.

Fitch Ratings believes any Strait of Hormuz closure will be temporary due to its critical economic role and current global oil supply surplus, which limits further price increases. However, escalating tensions, including Iran's missile attacks on Israel and continued US military actions, sustain upward pressure on prices.

Conversely, an increase in US commercial crude oil inventories, reported by the US Energy Information Administration (EIA) as a 3.5 million barrel rise to 439.3 million barrels, weighs on prices by reinforcing weak demand perceptions. US gasoline inventories fell by 1.7 million barrels, and daily crude oil production declined by 6,000 barrels to 13.69 million barrels.