Trump Pressures Iran; Oil Prices Near Three-Week Highs

Crude oil prices edged up during Friday's trading (August 21) as uncertainty surrounding Middle East conflicts reignited concerns regarding global energy supplies. West Texas Intermediate (WTI) traded around US$86.50 per barrel—a rise of approximately 0.63%—remaining close to the three-week high of US$87.38 reached in the previous session.

Meanwhile, Brent crude maintained its positive momentum, trading around US$93.50 per barrel after previously touching its highest level since late July. Brent is on track to record a weekly gain of over 5%, driven by heightened risks of supply disruptions stemming from US-Iran tensions that show no signs of resolution.

The energy market remains focused on the situation in the Middle East, particularly the standoff between the United States and Iran over the reopening of commercial shipping lanes in the Strait of Hormuz. The closure of this strategic waterway, combined with disruptions in the Bab el-Mandeb Strait, has led the market to price in a higher risk premium for oil.

Supply risks have also risen due to tensions in the Red Sea. The Iran-backed Houthi group has claimed responsibility for targeting several Saudi Arabian oil tankers since late July. These developments have raised concerns that an escalation in the conflict could disrupt oil export routes and tighten global supplies.

On the geopolitical front, pressure on Iran has intensified after US President Donald Trump threatened to implement a massive economic sanctions campaign against Tehran, including penalties for countries, companies, and financial institutions that continue to conduct business with Iran. Iranian Deputy Foreign Minister Abbas Araghchi condemned the move as illegal and inhumane, signaling that diplomatic efforts continue to face obstacles.

However, the rise in oil prices continues to face downward pressure from US market fundamentals. Data from the Energy Information Administration (EIA) shows that US crude oil inventories rose by 4.405 million barrels for the week ending August 14, far exceeding market expectations of a 600,000-barrel decline. This inventory build indicates that domestic supplies remain ample, which could limit the scope for further price gains.

Newsmaker Analysis: Oil prices retain a short-term bullish bias as long as geopolitical risks in the Middle East remain elevated and uncertainty persists regarding the reopening of the Strait of Hormuz. Brent crude has the potential to hold within the US$93–94 per barrel range, while WTI could still retest the US$87–88 per barrel level. However, the market must continue to monitor US oil inventory trends and potential breakthroughs in US-Iran diplomacy, which could exert downward pressure on the energy risk premium. (arl)

Source: Newsmaker.id