International oil prices rose on Wednesday as the market digested conflicting news about US-Iran negotiations and assessed the impact of escalating Middle East conflict on crude oil supplies. Trump and Rubio stated that the US was still in contact with Iran, but Iranian media offered conflicting accounts.
Oil prices rose in tandem
As of Asian trading hours, WTI crude oil futures for July delivery rose more than 1% to $94.81 per barrel, while Brent crude oil for August delivery rose 0.88% to $96.84 per barrel. Market focus remains on whether the situation in the Middle East will continue to deteriorate.
The US says negotiations are still ongoing.
President Trump and Secretary of State Marco Rubio said Tuesday that Washington remains in contact with Iran to discuss possible arrangements to prevent the conflict from escalating further. Rubio told a Senate Foreign Relations Committee hearing that it is "possible" for Iran to negotiate parts of its nuclear program.
However, Iranian media reports are inconsistent. Fars News Agency stated that Tehran and Washington have not exchanged information for several days. Tasnim, which has ties to the Iranian government, previously reported that Iranian negotiators would cease indirect communication with the United States and seek a complete closure of the Strait of Hormuz.
Military action fuels supply concerns
U.S. Central Command said Tuesday it had intercepted multiple Iranian ballistic missiles and drones and carried out defensive strikes after Iran “attempted to launch an attack.” This indicates that tensions in the Middle East remain escalating and that energy markets continue to price in geopolitical risk premiums.
The Strait of Hormuz is a vital global oil shipping route, and oil prices typically react swiftly to the risk of a blockade. Even if negotiations have not yet stalled, as long as military action continues, market concerns about supply and shipping will be difficult to dispel.
Fitch says the oil and gas industry is being disrupted.
Fitch Group analysts said on Tuesday that the Iraq War has caused widespread disruption to the Middle East oil and gas industry, with declining exports, partial production shutdowns, and billions of dollars in losses due to repeated attacks on infrastructure, prolonging the recovery period.
