Oil prices edge higher on uncertainty over exports through Hormuz

Both contracts closed on Tuesday at their highest since July 24 as hopes of peace between the US and Iran faded | Image: Bloomberg

Oil prices ticked higher in early trade on Wednesday, climbing for a fourth straight day on supply uncertainty as investors weighed ​conflicting messages from Tehran and Washington on whether the ​Strait of Hormuz is open to ships.

Brent crude futures climbed 26 cents, ‌or 0.29%, to $91.28 by 0004 GMT, while US West Texas Intermediate crude futures were up 37 cents to $85.31 a barrel.

Both contracts closed on Tuesday at their highest since July 24 as hopes of peace between the US and Iran faded.

US President Donald Trump said on Tuesday no talks were taking place with Iran and insisted the Strait of Hormuz was open, contradicting Iran's assertion that the critical waterway remained shut to shipping.

A temporary ceasefire agreement expired on Monday and a senior Iranian official told Reuters that ‌his country was moving to a "fully offensive" military posture due to the diplomatic stalemate, though there were no reports of fresh strikes by either side on Tuesday.

To avoid the Strait of Hormuz, Iraq's cabinet approved mechanisms for exporting Iraqi crude through specialized international and local companies and via multiple export outlets, the government said on Tuesday.

The contracts under the new mechanism will run for ​three months starting September 1, according to a statement issued after the cabinet meeting.

Meanwhile, two ‌Chinese shipping giants have stopped sending oil tankers through Hormuz and the Bab al-Mandeb strait amid the conflict in the West Asia and are ​instead ‌collecting oil cargoes outside the Gulf, according to three industry executives, tanker trackers and ‌a ship broker.

In the US, crude oil and distillate inventories fell, while gasoline stocks rose last week, market sources said on Tuesday, citing data from ‌the ​American Petroleum Institute.

Official inventory ​numbers from the US Energy Information Administration are due at 10:30 a.m. ET (1430 GMT), with analysts polled by Reuters expecting crude stocks ‌fell by about 600,000 ​barrels in the week ended August 14.

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