On Tuesday, front-month U.S. West Texas Intermediate (WTI) crude oil futures rose 5.23% to approximately $109.08 per barrel, marking a significant increase as the contracts approach expiry. This surge is part of a broader trend, with WTI futures on track for their ninth consecutive day of gains and a nearly 20% rise for the month.
Meanwhile, global benchmark Brent crude for December delivery increased by 1.65% to $111.36 per barrel, reaching its highest level since May. The rise in oil prices is largely attributed to heightened tensions in the Middle East, particularly due to recent attacks on commercial vessels in the Strait of Hormuz, where at least 18 ships have been targeted in the past two weeks.
Iran's Revolutionary Guard Corps has claimed responsibility for attacks on oil tankers, further escalating the situation. Tamas Varga, an analyst at PVM Oil Associates, noted that the strength in front-end WTI prices indicates tightness in the global crude market, driven by reduced export volumes from the Middle East and increased risks to oil infrastructure.
Additionally, the U.S. decision to exempt Russian shadow fleets from sanctions may lower freight rates, making U.S. crude more competitive as a substitute for Middle Eastern oil. Furthermore, a decline in U.S. commercial oil stocks is anticipated, adding to the bullish sentiment in the market