Crude oil posts third straight gain as U.S.-Iran strikes dim hopes for Strait of Hormuz deal

Renewed U.S.-Iran strikes drive a third straight crude gain

Crude oil prices added about 1% on Wednesday, extending a three-session rally after the largest round of U.S.-Iran strikes since July, according to Seeking Alpha. The volatility tracked renewed military exchanges that traders said dimmed prospects of a diplomatic deal to reopen the Strait of Hormuz and restart critical oil flows through the chokepoint.

A larger-than-expected U.S. inventory draw

Separately, U.S. commercial crude stockpiles fell more sharply than analysts had forecast, providing an additional supportive data point for prices. The Energy Information Administration reported that commercial crude stocks excluding the Strategic Petroleum Reserve dropped by 4.5 million barrels in the week ended Aug. 28, to 424.5 million barrels, leaving inventories about 1% above the five-year average for the period, according to The Wall Street Journal. A Wall Street Journal survey of analysts had projected a much smaller decline of 300,000 barrels.

Refinery utilization tightens the balance

The steeper-than-expected draw came as U.S. refineries operated near full capacity, the EIA said, tightening the near-term supply picture. With processing runs high, even modest changes in crude imports or production can translate into outsized weekly inventory swings, reinforcing the rally already fueled by geopolitical risk.

Wall Street pressured as energy costs climb

The jump in crude translated into broad equity weakness, with Wall Street declining as higher oil prices fed concerns about inflation and energy costs. The Honolulu Star-Advertiser reported that the same session's market selloff tracked the spike in crude, underscoring how the renewed U.S.-Iran confrontation was feeding through to risk assets beyond the commodities complex.

Supply outlook hinges on Strait of Hormuz and Middle East risk

With the Strait of Hormuz central to seaborne crude flows, traders cited the absence of a deal to reopen the waterway as the key risk overhang. Continued U.S.-Iran military activity raises the prospect of further disruption to regional exports, leaving the supply premium priced into futures until there is clearer signal on either de-escalation or a transit arrangement.

Next milestone

Market attention now turns to subsequent weekly EIA crude inventory data and any diplomatic or military signals from Washington and Tehran that could determine whether the Strait of Hormuz reopens or remains a live risk factor for crude.