Oil rises as US-Iran tension escalates after Iraq strikes and missile attack on Jordan

Oil prices rose more than US$3 a barrel on Wednesday after joint strikes in Iraq by the US and Saudi Arabia, and the interception of Iran’s ballistic missiles aimed at US forces in the Middle East, while US crude inventories shrank.

Brent futures increased by US$3.30, or 3.9 per cent, to US$87.39 a barrel by 0300 GMT, while US West Texas Intermediate crude rose US$3.05, or 3.8 per cent, to US$82.31 a barrel.

“Renewed strength comes after the US said it intercepted a surprise attack on US troops,” ING analysts said in a note.

“Saudi Arabia intercepted drones from Iranian-backed groups in Iraq, which were targeting Saudi energy infrastructure,” they said, adding that US and Saudi forces launched strikes on weapon sites across eastern Iraq.

The latest developments dampen expectations for a swift de-escalation in the Persian Gulf, they said.

The US military said it intercepted ballistic missiles launched by Iran towards US forces in the Middle East in what Washington called “an attempted surprise attack”

Iran’s elite Revolutionary Guards later said they fired several ballistic missiles at a US air base and military Central Command centre in Jordan.

Saudi Arabia also said its armed forces, in coordination with US Central Command, carried out “targeted strikes” against Iran-backed groups in Iraq it blamed for drone attacks on the kingdom’s oil facilities.

US crude inventories fell by about 3.3 million barrels in the week ended Jul 24, market sources said on Tuesday, citing data from the American Petroleum Institute.

Official inventory data from the US Energy Information Administration is due later on Wednesday.

Further supporting prices, Opec+ is likely to halt oil output increases for three months starting in October, sources says, after the producer group completes the scheduled return of barrels following voluntary cuts.

Source: businesstimes