Oil rebounded after a steep three-day slide as fresh fighting erupted in the Middle East, with continued threats to energy flows.
Brent climbed more than 3 per cent toward US$87 a barrel, paring some of the 16 per cent loss over the past three sessions, while West Texas Intermediate was near US$83.
The US military said it successfully intercepted an Iranian “attempted surprise attack” on US troops in the Middle East, according to a post on X.
Elsewhere, Iran-backed militias in Iraq fired drones at oil facilities in Saudi Arabia’s Eastern Region for a second day, piling pressure on the kingdom.
The Saudi Defense Ministry said that it had intercepted the assault on July 28, without clarifying whether any sites were damaged. Tehran denied its involvement, according to a report from state-run IRIB News.
Oil has been whipsawed in July, initially surging as hostilities between the US and Iran re-escalated and the conflict spread to the Red Sea, with the Tehran-backed Houthis threatening to blockade Saudi ports, before prices gave back some of the gains.
The latest uptick in fighting casts doubt over diplomatic efforts to resolve the conflict, which has now entered its sixth month.
“We remain exceedingly skeptical that we are on the brink of a major diplomatic breakthrough,” RBC Capital Markets LLC analysts including Helima Croft said in a note.
On the Strait of Hormuz, Iran told Oman that its proposal for a route through the critical waterway, with 50 per cent under Tehran’s control and 50 per cent under Oman’s, would not address the Islamic Republic’s concerns.
The inbound route must be entirely under Iran’s control, along with part of the outbound route, Deputy Foreign Minister Kazem Gharibabadi told state television.
In Washington, US President Donald Trump met Israeli Prime Minister Benjamin Netanyahu, as the US leader sought to avoid renewed bombing in Iran. Israel – which launched the war alongside the US in February – signalled it favored talks.
After the meeting, an Israeli spokesman said all parties preferred the “easy way”, a negotiated settlement, over the “hard way”, military action.
“There is room for the short end of the curve to fall,” said Rob Thummel, senior portfolio manager at Tortoise Capital Advisors LLC, referring to crude futures’ nearer contract months. “But the back end of the curve likely moves higher unless some diplomatic solution is reached.”
In a fresh sign of the pressure on global inventories, the American Petroleum Institute reported that nationwide US oil stockpiles fell 3.3 million barrels last week, according to a document seen by Bloomberg. The drop included a draw at the key hub at Cushing, Oklahoma. Official data will follow later on July 29.
The gyrations in oil and product prices caused by the war have complicated the challenge facing central bankers as they seek to contain inflation. In the US, Federal Reserve policymakers will decide on rates later on July 29, with some forecasters saying that they expect a hike. BLOOMBERG
