The fourth consecutive day of gains reflects a market still pricing genuine uncertainty over whether the Strait of Hormuz is actually navigable, rather than reacting to any single fresh escalation. The direct contradiction between Washington’s insistence the strait is open and Tehran’s assertion that it remains closed leaves shippers and insurers with little to act on, which tends to keep a risk premium embedded in price even without new strikes. Iraq’s move to diversify export routes away from Gulf shipping, and further reports of Chinese shipping majors avoiding Hormuz and Bab al-Mandeb entirely, both point to the physical market adjusting around the uncertainty rather than waiting for it to resolve. With the temporary ceasefire having lapsed and no clear diplomatic path forward, prices look supported near recent highs until either side offers something more concrete than rhetoric.
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Oil rose for a fourth straight session as Washington and Tehran continue to give conflicting accounts of whether Hormuz is actually open.
Summary:
- Brent and WTI both edged higher in early Asia trade on Wednesday, extending a run of gains to a fourth straight session
- Both contracts closed Tuesday at their highest levels since July 24, with peace hopes between the US and Iran fading
- Trump said no talks were taking place with Iran and insisted the Strait of Hormuz remains open, directly contradicting Iran’s position that the waterway is shut
- A temporary ceasefire agreement expired Monday, with a senior Iranian official pointing to a more hardline shift amid the diplomatic stalemate, though no fresh strikes were reported Tuesday
- Iraq’s cabinet approved a three-month mechanism, starting September 1, to export crude via international and local firms and multiple outlets, partly to avoid the strait
- Two major Chinese shipping firms have stopped sending tankers through Hormuz and Bab al-Mandeb altogether, instead collecting cargoes from outside the Gulf
Oil prices ticked higher in early Asia trade on Wednesday, extending gains into a fourth straight session as investors continued to weigh conflicting signals from Washington and Tehran over whether the Strait of Hormuz remains open to shipping.
Brent crude edged up to around $91 a barrel, while US WTI crude rose to around $85, both building modestly on Tuesday’s close, when the contracts settled at their highest levels since July 24 as hopes for a US-Iran peace deal continued to fade.
President Trump said on Tuesday that no talks were taking place with Iran and reiterated his position that the Strait of Hormuz remains open, a claim directly at odds with Iran’s own assertion that the critical waterway is shut to shipping. The dispute leaves the market with no clear read on the physical state of transit through the strait, which continues to underpin the price support seen over recent sessions.
A temporary ceasefire agreement between the two countries expired on Monday, and a senior Iranian official told Reuters the country was shifting toward a more hardline posture given the ongoing diplomatic stalemate, though there were no reports of fresh strikes by either side on Tuesday. The absence of new attacks has not been enough to ease pricing, given the standoff over the strait’s actual operational status remains unresolved.
Against that backdrop, physical market participants are increasingly acting to route around the uncertainty rather than wait for clarity. Iraq’s cabinet approved a new mechanism allowing crude exports through specialised international and local companies via multiple outlets, with contracts running for three months from September 1. The move is aimed in part at reducing Iraq’s exposure to the strait, given the country’s heavy reliance on southern Gulf export terminals.
Separately, Reuters reports that two major Chinese shipping companies have stopped sending oil tankers through both the Strait of Hormuz and the Bab al-Mandeb strait entirely amid the conflict, according to industry executives, tanker trackers and a ship broker, instead collecting cargoes from locations outside the Gulf altogether. Combined with Iraq’s export diversification, the moves point to a market that is beginning to structurally adjust its shipping patterns around the risk, rather than treating the disruption as a short-term event likely to resolve quickly.
This article was written by Eamonn Sheridan at investinglive.com.