Oil prices held largely steady on Wednesday 10 June as new tensions between the US and Iran blurred the market’s near-term outlook, although expectations of a decline in US inventories provided some support.
By 07:36 GMT, Brent crude futures had risen by $0.25, or 0.27%, to $91.70 a barrel (bbl), reported Reuters.
Meanwhile, US West Texas Intermediate (WTI) had gained $0.23, or 0.26%, to $88.43/bbl.
Both contracts had initially risen during trading hours following reports of fresh strikes by US and Iranian forces. However, prices retreated later towards the close of the session.
The US military targeted Iranian sites after US President Donald Trump pledged a response to the downing of a US Apache helicopter.
Tehran warned that it would resume hostilities if Israel continued operations against the Hezbollah militia in Lebanon.
Israel has maintained its campaign against the Iran-backed group, complicating US diplomatic efforts to convert a temporary ceasefire into a more lasting solution.
In addition to the ongoing conflict, Iran continues to limit most shipping through the Strait of Hormuz, a critical passageway for both crude oil and liquefied natural gas (LNG).
In response, the US has implemented its own blockade of Iranian ports.
Meanwhile, oil stockpiles in major economies are rapidly declining, reported Reuters.
Inventories in nations belonging to the Organisation for Economic Co-operation and Development are projected to fall below 2.3 billion barrels by December, as outlined in the US Energy Information Administration's (EIA) monthly Short-Term Energy Outlook.
The EIA noted this would be the lowest level since records began in 2003, attributing the sharp drawdown to an 11 million barrel per day loss in Middle Eastern production.
Amid these factors, recent speculation of a possible US-Iran agreement to partially reopen the Strait of Hormuz had put downward pressure on prices in prior weeks.
The US plans to release part of its strategic energy reserves and increase exports of liquefied petroleum gas and LNG to the Association of Southeast Asian Nations (ASEAN), reported Reuters.
US Deputy Secretary of State Christopher Landau, speaking at an ASEAN Future forum in Hanoi, said: “The current energy crisis has clearly outlined the need for countries to diversify energy resources, and the US wants to work with you to help ASEAN member states not only navigate the current situation but also to support long-term energy security and resilience.”
Amid these developments, China’s approach to energy security has come under focus.
According to a report by GlobalData TS Lombard authored by Rory Green, China's economic resilience in the oil and gas sector is strengthened by its strategic stockpiling of commodities and increased reliance on non-fossil fuel energy sources, which help mitigate the risks of global oil disruptions.
Green notes that while China is well-equipped to handle higher oil costs, the potential closure of the Strait of Hormuz remains a significant risk that could impact the country's growth.
