Oil Prices Steady as Investors Weigh US-Iran War Outlook

• The UAE suspended all financial and economic transactions with Iran, intensifying regional tensions between major Gulf oil producers
• Shipping through the Strait of Hormuz remained severely disrupted despite conflicting statements from the U.S. and Iran about whether the key waterway was open
• U.S. crude inventories unexpectedly rose by 4.4 million barrels last week, significantly exceeding forecasts of a 600,000-barrel draw

Summary: Oil Prices Steady Amid U.S.-Iran War Tensions

Key Market Data:

Oil prices stabilized in early Thursday trading as investors evaluated ongoing U.S.-Iran conflict and Strait of Hormuz security concerns. Brent crude futures (October) rose 0.3% to $91.87/barrel, while WTI crude (September) slipped to $85.81/barrel. The more active October WTI contract gained 0.2% to $84.53/barrel. Both benchmarks recorded their fourth consecutive session of gains Wednesday, reaching highest levels since July 24.

Geopolitical Developments:

The UAE suspended all financial and economic transactions with Iran indefinitely, highlighting tensions among major Gulf oil producers. Conflicting reports emerged regarding the Strait of Hormuz status: President Trump claimed the waterway was open and negotiations were underway, while Iran maintained it remained shut. Shipping data confirmed significantly reduced traffic through the strait as shipowners avoided the critical waterway due to unclear signals about its reopening from an Iran-imposed blockade.

Market Analysis:

According to Nissan Securities' Hiroyuki Kikukawa, oil prices remain elevated due to sporadic Middle East attacks but lack momentum without major escalation. The market is expected to maintain a gradual upward trend given uncertainty over peace talks and tensions involving the UAE, Oman, and Iran.

Supply Data:

U.S. crude inventories rose 4.4 million barrels in the week ending August 14, significantly exceeding estimates of a 600,000-barrel draw. Gasoline inventories also increased, while distillate stockpiles fell, according to EIA data.

Market Implications:

Continued geopolitical uncertainty supports higher oil prices, with the Strait of Hormuz closure posing significant supply disruption risks for global energy markets.