Crude oil climbed above $86 a barrel on Wednesday as escalating tensions in the Middle East heightened fears of further disruptions to energy supplies. The UAE announced it was suspending financial and economic dealings with Iran after accusing Tehran of firing ballistic missiles at its territory, while US President Donald Trump stated there were no ongoing negotiations to end the conflict.
Market anxiety increased further after three China-linked supertankers reversed course while crossing the waterway, and another vessel was reportedly hit by a projectile near the strait. Even so, Gulf producers have continued to move substantial crude volumes via alternative routes and discreet shipments, helping to cushion the impact on global supply.
US refinery activity also lent support to prices, with processing rates rising to their highest level since September 2019. However, US crude inventories still expanded by 4.4 million barrels last week, while distillate stocks dropped by 1.5 million barrels to their lowest level in more than a month.