Oil Holds Near $107 With Mideast Impasse, World Inventories Drop
(Bloomberg) -- Oil largely held its 8% surge over the past three sessions, as Middle East tensions simmer and global stockpiles shrink at a record pace.
Brent crude traded above $107 a barrel, paring most of its retreat earlier on Wednesday, after the International Energy Agency said global observed oil inventories declined at a rate of about 4 million barrels a day in March and April.
The Middle East conflict has thrown energy markets into disarray, with refineries in Asian nations such as Japan scrambling for alternatives to supplies from the Gulf. The Strait of Hormuz, which links the Gulf to open seas, has been effectively closed since the war began, and a US blockade has added another sticking point in efforts to end the conflict.
“With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period,” the Paris-based IEA said in its Oil Market Report. The market will remain “severely undersupplied” until October even if the conflict ends next month, the agency said.
Meanwhile, oil shipments from Iran’s main export terminal appear to have come to a standstill over the past several days, in the first sign of a prolonged halt since the start of the war.
US President Donald Trump downplayed the amount of attention the Iran conflict would get during his summit with Chinese counterpart Xi Jinping, saying “we have Iran very much under control.” But American gasoline prices have surged to the highest since 2022, a politically sensitive development ahead of crucial midterm elections in November.
In another sign of wider strain, Vietnam’s state oil company has urged the US to let a supertanker laden with crude pass through its naval blockade outside the Gulf, saying the shipment is vital to its economy. The vessel crossed Hormuz but U-turned on Monday near the cordon.
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