Global oil prices climbed about 1 per cent on Wednesday, moving off a seven-week low, after the US military launched fresh strikes on Iran in retaliation for the downing of a US Army Apache attack helicopter near the Strait of Hormuz, and as market data showed another large draw in US crude stocks.
Brent crude futures rose 83 cents, or 0.9 per cent, to US$92.29 a barrel, while US West Texas Intermediate (WTI) crude climbed 68 cents, or 0.8 per cent, to US$88.97. Brent had settled at its lowest level since April 17 in the previous session, while WTI had closed at its weakest since May 29 after Israel and Iran temporarily halted direct attacks on each other at President Donald Trump’s urging.
The fresh exchange threatens to unravel that fragile ceasefire. Tehran has said it would resume hostilities if Israel continued to attack Iran-backed Hezbollah in Lebanon, and Israel’s refusal to end its campaign in Lebanon has stalled Trump’s wider peace push — a dynamic that already produced a $2 spike on Monday after the Beirut strikes.
Tehran continues to block most shipping through the Strait of Hormuz, which normally carries a fifth of the world’s crude oil and liquefied natural gas, while Washington maintains its own blockade of Iranian ports. US Energy Secretary Chris Wright said on Tuesday that ship traffic in the Gulf and oil exports through the strait are gradually rising even as the two sides struggle to reach a deal on ending their more than three-month-old war.
On the supply side, US crude inventories fell for an eighth consecutive week, according to American Petroleum Institute data released Tuesday and cited by market sources. Crude stocks fell by 9.12 million barrels in the week ended June 5, with gasoline inventories down a further 1.19 million barrels. The United States has acted as a marginal supplier of crude and products during the war and ramped up exports to Asia and Europe; lower US inventories could constrain those exports and push prices higher.
For Sri Lanka, the recovery in Brent off recent lows reinforces the supply-side picture supporting the Central Bank’s net US$211.3 million dollar sales in May and the rupee’s weakness in the Rs.332–342 band, even as the wider monthly fuel bill remains anchored on Hormuz risk.
