Oil rises on uncertainty over Hormuz Strait opening

Oil prices continued to rise on August 7 amid renewed tensions in the Strait of Hormuz. During morning trading, Brent futures rose above $84 a barrel and U.S. WTI approached $79.

Later, quotes partially retreated from daily highs. As of 6:57 a.m. UK time, Brent was trading around $83.58 a barrel, gaining 1.3%. The high for the session was $84.44. September WTI futures were near $77.94, rising up to $78.77.

The increase came after a nearly 4 percent jump in the previous session. The market reacted to the Iranian Fars news agency's report of an attack on "hostile targets" in the Strait of Hormuz. According to the report, the strikes occurred on the evening of August 6 after explosions near Iran's Qeshm Island.

There was no independent confirmation of the circumstances and results of the attack at the time of publication.

Adding to the uncertainty are talks between Iran and Oman regarding a new regime for ship passage through the strait. Tehran seeks to ban the passage of U.S. and Israeli ships, as well as to demand compensation from countries it considers hostile.

The United States is insisting on free navigation and a return to pre-war operational conditions in the strait. Due to significant differences between the parties, optimism over a quick resumption of oil supplies from the Persian Gulf has waned.

A geopolitical risk premium was also supported by escalating tensions in Yemen. Iran-backed Houthis claimed a large-scale attack on Saudi Arabia-backed government forces and have previously threatened shipping in the Red Sea.

Further price dynamics will depend on the outcome of negotiations over the Strait of Hormuz and the actual resumption of tanker traffic. A prolonged supply restriction could increase pressure on global fuel prices, though in Ukraine their dynamics also depend on the hryvnia exchange rate, taxes and logistics costs.

Materials from: Bloomberg, MarketWatch, The Wall Street Journal