Oil climbs for fourth day as Hormuz shipping uncertainty persists

Oil prices rose for a fourth consecutive day on August 19 as investors weighed conflicting statements from Tehran and Washington over whether the Strait of Hormuz is open to shipping.

Brent crude futures rose 69 cents, or 0.8%, to $91.71 a barrel by 0415 GMT, while US West Texas Intermediate crude futures gained 76 cents, or 0.9%, to $85.70, Caliber.Az reports, citing Reuters.

Both benchmarks closed at their highest level in more than three weeks on August 18 as hopes for peace between the United States and Iran faded.

US President Donald Trump said on August 18 that no talks were taking place with Iran and insisted that the Strait of Hormuz was open. His comments contradicted Iran's assertion that the strategic waterway remained closed to shipping.

A temporary ceasefire agreement expired on August 17, while a senior Iranian official told Reuters that the country was moving towards further confrontation amid the diplomatic stalemate. There were no reports of fresh strikes by either side on August 18.

"The shipping risks are increasing again as attacks from Iran and Houthis remain prevalent in both key chokepoints, keeping oil prices supported in the near term," said June Goh, senior oil market analyst at Sparta Commodities, referring to the Strait of Hormuz and Bab el-Mandeb strait.

Shipping traffic through Hormuz slowed on August 19, with data showing that most shipowners were avoiding the waterway because of uncertainty over whether and when the blockade would be lifted.

"However, Gulf producers are finding alternative export routes to bring oil out to the Gulf of Oman," said Goh. "If sustainable, this could help increase shut-in production from these two producers."

Iraq's cabinet has approved mechanisms to export Iraqi crude through specialised international and local companies and via multiple export outlets, the government said on August 18. Contracts under the new mechanism will run for three months from September 1.

Two Chinese shipping giants have also stopped sending oil tankers through the Strait of Hormuz and Bab el-Mandeb amid the conflict in the Middle East, instead collecting oil cargoes outside the Gulf.

Brent crude rose about 6% last week, adding to concerns among traders about the potential impact of prolonged disruption to key oil shipping routes.

In the United States, crude oil and distillate inventories fell last week, while gasoline stocks increased, according to market sources citing data from the American Petroleum Institute.

Official inventory data from the US Energy Information Administration is due later on August 19. Analysts polled by Reuters expect crude inventories to have fallen by about 600,000 barrels in the week ended August 14.

By Aghakazim Guliyev