Tom Paiva Photography | Tetra Images | Getty Images
Oil prices climbed on Tuesday as investors continued to monitor simmering tensions in the Middle East and the U.S. front-month futures contract neared expiration.
U.S. West Texas Intermediate futures for November were up 2% to $105.75 per barrel by 9:02 a.m. ET, pulling back from a session high of $110.48. The November contract expires on Tuesday. WTI for December was 1.3% higher at $99.82 per barrel.
Global benchmark Brent crude futures for December delivery were trading above $110 at the highest levels since May. Brent was last up 1% at $110.70.
Crude oil futures
Developments in the Middle East remain in focus, with attacks on commercial ships transiting the Strait of Hormuz escalating in recent weeks. At least 18 vessels have come under fire over the past two weeks, according to ship tracker Kpler.
Iran’s Revolutionary Guard Corps said Tuesday that two “non-compliant” oil tankers had been set ablaze in the strait after hitting mines laid by its naval unit, Iranian state-affiliated news agency Tasnim reported.
Meanwhile, Foreign Ministry Spokesperson Esmaeil Baqaei said at a weekly news conference on Tuesday that Tehran would respond to any American strike “in equal measure, if not more forcefully,” according to Tasnim.
U.S. President Donald Trump said earlier this month that American forces will not attack Iran before the midterm elections on Nov. 3.
Tamas Varga, analyst at PVM Oil Associates, told CNBC in an email on Tuesday that front-end WTI strength ahead of the contract expiry is a sign of tightness in the global crude oil market.
“It is a reflection of falling export volumes from the Middle East as tanker attacks and Houthi strikes on Saudi oil infrastructure intensify,” he said. “Secondly, the U.S. decision to exempt Russian shadow fleet from sanctions will push freight rates possibly lower, which was a prohibitive factor to increase demand for U.S.-sourced crude.”
“With this hurdle removed, at least temporary, U.S. crude oil grades are back in play as replacements of Mideast crude oil,” he added. “Thirdly, U.S. commercial oil stocks are expected to have declined last week.”
