Oil prices extended their rise on Wednesday as fighting between the United States and Iran continued around the Persian Gulf and threats of a blockade in the Red Sea added to growing uncertainty about the flow of energy from the region.
Secretary of State Marco Rubio said on Wednesday that U.S. forces would continue to attack Iran as long as it tried to exercise control over shipping traffic, which has dwindled in recent weeks. A day earlier, President Trump and Defense Secretary Pete Hegseth threatened to deepen the war effort, including by potentially targeting the Houthis.
On Wednesday, Mr. Trump further threatened the Iranians, saying on his social media network that if the country attacks any ship in the Strait of Hormuz, “the United States will bomb and destroy ONE BRIDGE OR POWER PLANT, including those located next to, or in, the Capital City of Tehran.”
Oil posts another sharp daily gain.
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The price of Brent crude, the global benchmark for oil, rose roughly 2.5 percent to above $93 a barrel. Brent has gained about $10 a barrel over the past week after a series of sharp increases, as the fighting in the Middle East has intensified. The cost of crude is up 30 percent since the start of the war.
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West Texas Intermediate crude, the U.S. benchmark, rose over $86 a barrel.
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Investors and analysts are focused on several factors that will inform the trajectory of oil prices. They include how many ships are passing through the Strait of Hormuz, the narrow waterway between Iran and Oman; whether the Houthis will follow through on their threat to restrict traffic in the Bab al-Mandab strait at the southern end of the Red Sea, which Saudi Arabia has used as an alternative to Hormuz; and how much oil China is buying.
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The conflict is widening at a vulnerable time for energy markets. Oil stockpiles are smaller than they were when U.S.-Israeli strikes on Iran began at the end of February, and Ukrainian attacks have severely damaged Russian refineries, tightening supplies of transportation fuels like diesel.
Shipping traffic in the Persian Gulf remains low.
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Only nine ships passed through the Strait of Hormuz on Tuesday, according to the latest data from the maritime data firm Kpler. Traffic in the waterway has dwindled during the upsurge in fighting, with Iran stepping up attacks on ships.
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The Houthis, an Iran-backed militia in Yemen, further threatened shipping in the Middle East by announcing a blockade on ships from Saudi ports. After the threat, oil tankers heading toward the Bab al-Mandab strait, at the southern end of the Red Sea, made U-turns and were moving north toward the Suez Canal, according to Kpler. In recent months, Saudi Arabia has redirected millions of barrels per day via the Red Sea instead of the Persian Gulf. If Bab al-Mandab becomes too risky to navigate, shipping oil instead through the Suez Canal can be costlier and logistically more complex.
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Two of the world’s biggest shipping firms said on Tuesday that they would impose emergency surcharges to compensate for a surge in fuel prices. France’s CMA CGM said it would impose an emergency fuel surcharge of $75 to $165 on some shipping containers from Aug 1. Maersk of Denmark said it would impose surcharges of 4 to 15 percent on inland shipments for the Nordic region starting on Wednesday.
Gasoline prices continue to rise.
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Gas prices in the United States rose by 4 cents on Wednesday, to $4.06 a gallon, according to the AAA motor club. The national average price at the pump has risen 36 percent since the war began.
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Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days. Fuel markets are especially strained right now because so many of the world’s refineries are offline or producing less after sustaining damage, including in the Persian Gulf and Russia.
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The average price of diesel rose to $5.18 a gallon on Wednesday, up about 38 percent since the start of the war.
Global stocks are mixed ahead of big tech earnings.
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The S&P 500 pointed nudged lower as markets reopened in the United States on Wednesday. Investors await quarterly earnings from Alphabet and Tesla, multitrillion-dollar behemoths that can have a major influence on index movements. They release their financial reports after the close of U.S. trading.
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In Europe, the Stoxx 600, an index tracking the region’s largest companies, gained about 0.8 percent.
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Stocks in Asia, where countries import vast quantities of oil and gas, were little changed. But currencies across Asia were pressured by the resurgence in oil prices. On Wednesday, the Japanese yen traded at around 163 against the dollar — its weakest level in roughly four decades.
Yan Zhuang and River Akira Davis contributed reporting.
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