SerpApi.Org
U.S. crude oil added another 2% post-market Wednesday to ~$88/bbl after Iran-backed Houthi rebels said they targeted two Saudi Arabian tankers in the Red Sea, further escalating the Middle East conflict.
The Houthis said they attacked the two vessels with missiles and drones for violating their declared blockade of Saudi shipping in the Red Sea, identifying the tankers as the Encelia and the Layla.
The first attacks on tankers in the Red Sea open up a new front in the war after Iran attacked vessels in the Strait of Hormuz in recent days.
Ship tracking data showed five tankers changed course in the Red Sea on Wednesday, with two signaling the Suez Canal as their new destination, following the Houthis' warning.
U.S. forces launched a 12th consecutive day of strikes on Iran, which U.S. Central Command said was intended to further degrade the country's ability to threaten commercial shipping in Hormuz; Iran responded by attacking Kuwait.
President Trump said on Truth Social that the U.S. would "bomb and destroy one bridge or power plant" any time Iran fires at vessels in the Strait of Hormuz.
The market is trying to weigh if Trump "really wants to do that next level of escalation," Rabobank senior energy strategist Joe DeLaura said in a note.
If the U.S. starts hitting power plants and infrastructure, Iran will start attacking power plants or desalination plants in Saudi Arabia and other Persian Gulf countries, hitting critical water supplies, DeLaura said.
"If we continue to see this kind of escalation, then we're going to see a very big hike because we're going to be developing into a much wider and much deeper war," he said.
The Middle East developments outweighed bearish data from the U.S. Energy Information Administration showing domestic inventories of commercial crude oil and gasoline rose unexpectedly last week.
Crude oil stocks excluding the Strategic Petroleum Reserve rose by 2M barrels to 411.7M barrels in the week ended July 17, and were 6% below the five-year average for the time of year, the EIA reported.
U.S. gasoline inventories rose by 765K barrels to 211.3M barrels, 7% below the five-year average, and distillate fuel stocks increased by 1.4M barrels to 109.6M barrels, 10% below the five-year average for the time of year.
In regular trading Wednesday, front-month Nymex crude (CL1:COM) for September delivery jumped 2.9% to $86.83/bbl, and front-month Brent September crude (CO1:COM) surged 3.3% to $94.07/bbl, the fourth consecutive daily gain for both benchmarks.
U.S. natural gas futures (NG1:COM) settled higher, with the market keeping an eye on Tropical Storm Bertha, which is expected to cause only minor production disruptions along the U.S. Gulf Coast; the front-month Nymex August contract closed up 2.1% to $2.925/MMBtu.
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