Oil prices hit three-week high on Middle East supply concerns

Oil prices climbed to their highest levels in three weeks on Thursday, fueled by persistent concerns over the deadlock related to the Iran war and its impact on Middle East supplies.

As of 12:04 GMT, Brent crude futures for October delivery rose $2.80, or 3.1%, to $94.42 a barrel. US West Texas Intermediate (WTI) crude futures for September delivery gained $2.84 to $88.67 a barrel, while the more actively traded October WTI contract increased by $2.87, or 3.4%, to $87.26.

Both benchmarks reached their highest levels since July 24 during the session and posted gains for the fifth consecutive session. The September WTI contract is set to expire later on Thursday.

Giovanni Staunovo, an analyst at UBS, noted that tensions in the Middle East remain high, leaving room for further supply disruptions. He added that declining oil exports from the region are adding pressure to the oil market.

Meanwhile, the UAE's decision to suspend all financial and economic transactions with Iran until further notice has once again highlighted strained relations between the two countries. Hiroyuki Kikukawa, chief analyst at Nissan Securities Investment, said oil prices remain elevated, supported by sporadic attacks in the Middle East, despite the lack of new momentum due to no major escalation. He expects the market to maintain a gradual upward trend amid uncertainty over peace talks and ongoing unrest involving the UAE, Oman, and Iran.

US President Donald Trump said on Tuesday that no talks are underway with Iran and that the Strait of Hormuz remains open, while Iran maintains the waterway is still closed. On Wednesday, Trump warned of economic consequences for any country providing a "lifeline to Iran."

Shipping data showed that vessel traffic through the Strait of Hormuz on Wednesday was unchanged from the previous day, as negotiations between the US and Iran remain stalled. Before the outbreak of war on February 28, shipments through the strait accounted for about one-fifth of global consumption, but current flows have dropped significantly.

The conflict has also affected refined fuel supplies, leading to lower inventories as less crude is available to refineries. The US Energy Information Administration reported on Wednesday that US distillate stocks, including diesel and heating oil, fell for a third straight week, while crude inventories rose by 4.4 million barrels.