LONDON: Oil prices jumped more than US$2 on Wednesday after Iran said there was little reason to expect diplomatic progress with the United States, leaving Brent crude near five-month highs, with further support from falling US crude and fuel inventories.
Brent crude futures gained US$2.06, or 1.9 per cent, to US$110.85 a barrel by 1048 GMT. US West Texas Intermediate (WTI) crude rose US$2.13, or 2.2 per cent, to US$99.95.
In the previous session, Brent hit its highest level in five months, while WTI touched a six-month peak before prices fell following discussions on mediation efforts during a meeting between Iran's president and Pakistan's army chief in Tehran.
On Wednesday, Iranian Foreign Minister Abbas Araqchi told the Financial Times that Iran was fully prepared to defend itself, while President Masoud Pezeshkian told state media that the United States could not expect dialogue while blockading and threatening Iran.
"Neither of the two geopolitical conflicts underpinning the market's bullish sentiment has shown any signs of de-escalation," PVM analysts said, referring to the Middle East and Russia-Ukraine wars.
At least 18 vessel attacks were recorded over the past two weeks, Kpler data showed, while LSEG analysts said Iran was targeting tankers well beyond the Strait of Hormuz, extending into the Gulf of Oman and threatening Gulf crude loadings and ship-to-ship transfers supporting regional shipments.
Iran-aligned Houthis on Monday claimed responsibility for attacks on a Saudi Aramco site in Yanbu, the Shaybah oilfield and airports in Riyadh and Abha, Saudi Arabia.
In the United States, two Energy Department officials said on Tuesday that they were working with refiners worldwide to boost fuel output.
US crude stocks fell by 4.9 million barrels in the week ended October 16, with gasoline and distillate inventories also declining, market sources said, citing American Petroleum Institute data.
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