Oil markets pushed further into positive territory on Thursday, marking a fifth consecutive session of gains as traders grew increasingly convinced that the stalemate over Iran shows no sign of resolving, and with it, no sign of relief for a supply chain already stretched thin by weeks of disruption.
Brent crude for October delivery climbed $1.20, or 1.3%, to $92.82 a barrel by 0:813 GMT, while U.S. West Texas Intermediate for September delivery in its final session before expiry added 92 cents to reach $86.75.
The more actively traded October WTI contract, which will take over as the front-month benchmark once September rolls off the board later Thursday, gained $1.13, or 1.3%, to $85.52. Both benchmarks touched their highest levels since late July intraday, extending a run that saw them settle Wednesday at their strongest since July 24.
The moves underscore a market increasingly resigned to prolonged disruption rather than bracing for a single dramatic shock.
“Tensions in the Middle East remain high, leaving room for further supply disruptions,” said UBS analyst Giovanni Staunovo, framing the rally less as a reaction to any single event than as the cumulative weight of a region still failing to normalize. “Lower oil exports from the Middle East are once again tightening the oil market.”
Adding a fresh layer of uncertainty was the United Arab Emirates’ move to suspend all financial and economic transactions with Iran until further notice, a decision that has thrust the already fraught relationship between the Gulf Arab producer and Tehran back into the spotlight.
While the UAE has generally sought to keep commercial channels open even amid regional friction, the suspension signals a hardening of Gulf state posture toward Iran and raises the prospect of further economic isolation efforts by other producers in the region.
For a market already jittery over the security of shipping lanes and export infrastructure, any sign of diplomatic rupture among the region’s key players tends to be read as a leading indicator of further supply tightness, and traders responded accordingly.
Despite the sustained climb, analysts were careful to note that the rally has been more a grinding upward drift than a panic-driven spike. “Oil prices remained elevated as the market is supported by sporadic attacks in the Middle East but lacks fresh momentum without a major escalation,” said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment.
He added that the path of least resistance for prices remains higher for now: “The market is likely to maintain a gradual upward trend given uncertainty over peace talks and tensions involving the United Arab Emirates, Oman, and Iran.”
That characterization of persistent risk premium without acute crisis-level spikes has come to define trading patterns since the conflict began, with prices ratcheting upward in response to incremental bad news rather than any single catastrophic event.
The diplomatic picture remains muddled. On Tuesday, President Donald Trump said no talks were underway with Iran and asserted that the Strait of Hormuz, the narrow waterway through which a substantial share of the world’s seaborne oil trade passes, remained open.
Iranian officials, however, maintained that the strait was shut, leaving shippers, insurers, and traders to navigate starkly conflicting accounts of the situation on the ground.
Trump sharpened his rhetoric further on Wednesday, warning of economic consequences for any country found offering Iran “any type of lifeline,” language that markets interpreted as a signal Washington intends to tighten, not ease, pressure on Tehran and its trading partners in the near term.
Ship-tracking data offered little clarity of its own: traffic through the strait on Wednesday was essentially unchanged from the prior day, reflecting a standoff that has settled into a holding pattern even as negotiations to end the broader conflict remain deadlocked.
Before the war began, triggered by U.S. and Israeli strikes on Iranian targets on February 28, roughly one-fifth of global oil consumption moved through the Hormuz chokepoint each day. Current flows remain far below that pre-war baseline, a shortfall that continues to work its way through global crude balances.
The conflict’s fingerprints are increasingly visible not just in crude flows but in the refined products market as well.
With less crude reaching refiners, the U.S. Energy Information Administration reported Wednesday that distillate stockpiles in the category covering diesel and heating oil fell for a third consecutive week, tightening a segment of the market that industrial users and transport operators rely on heavily.
The one counterintuitive data point came on the crude side: U.S. commercial crude inventories rose unexpectedly by 4.4 million barrels, defying analyst expectations for a drawdown.
That build offered a modest, if temporary, counterweight to the broader bullish narrative, though it was not enough to interrupt the week’s upward price momentum, a sign that geopolitical risk, rather than weekly inventory data, remains firmly in the driver’s seat for now.
With peace talks stalled, rhetoric hardening in Washington, and Gulf relations fraying further, traders appear to be pricing in a Middle East supply picture that stays constrained for the foreseeable future.
Barring a major escalation or an equally significant breakthrough at the negotiating table, analysts suggest the path of least resistance for crude prices remains higher, even if the climb continues at a gradual, rather than dramatic, pace.
WHAT YOU SHOULD KNOW
Oil prices have climbed to three-week highs for a fifth straight session, and the single biggest factor driving this is the unresolved Iran conflict choking Middle East supply, not any one dramatic event, but a steady grind of disruption: shut or contested shipping through the Strait of Hormuz, the UAE’s sudden economic break with Iran, deadlocked peace talks, and Trump’s warning against anyone aiding Tehran.
With crude flows through Hormuz still far below pre-war levels and diesel stockpiles now falling for a third straight week, the takeaway is simple: as long as this standoff drags on without a major escalation or a breakthrough, oil prices are likely to keep drifting higher.
