Oil Futures Rise After Recent Selloff as Middle East Risks Persist

Oil contracts had fallen about 17% since the start of the month, as President Trump signaled the United States was unlikely to renew major military action against Iran. Wednesday’s gains followed reports that mines had damaged tankers in the Strait of Hormuz and that the United States had attacked military sites on Iran’s Qeshm Island.

In morning trade, December West Texas Intermediate rose $1.94 to $87.98 a barrel, while January WTI gained $1.74 to $86.60. January Brent was up $2.37 at $93.86 a barrel, and February Brent added $2.17 to $91.62.

The price increases came despite signs that global crude supply is recovering from earlier war-related disruptions. OPEC reported Wednesday that Saudi Arabia produced 10.56 million barrels per day in October, its highest monthly average since the war began in late February.

Konstantinos Chrysikos, head of customer relationship management at Kudo.com, said Middle East crude exports had returned to pre-tensions levels and estimated the market was oversupplied by 1.4 million barrels per day in October. OPEC output rose by almost 1.4 million barrels per day that month to 22.87 million barrels per day, he said, adding that stronger supply could keep pressure on prices.

Chrysikos said a ceasefire backed by a credible plan to clear the Strait of Hormuz could extend the selloff, while further tanker strikes could restore some of the risk premium. He said oil prices were responding to expectations for the return of normal traffic through the strait and a diplomatic outcome.