Oil surged nearly 4% as fiery UN rhetoric dashes near-term Hormuz breakthrough
The sharp rebound reversed Tuesday’s retreat, re-establishing geopolitical risk premiums after both benchmarks had touched their lowest levels since early September.
Global crude oil futures surged roughly 4% on Wednesday, snapping a multi-session decline and pushing Brent firmly back above $100 a barrel as defiant rhetoric from Iranian leadership at the United Nations dampened hopes for an imminent reopening of the Strait of Hormuz.
International benchmark Brent crude rose $3.83, or 3.86%, to settle at $103.08 a barrel. US West Texas Intermediate (WTI) crude gained $1.64, or 1.81%, to finish at $92.16 a barrel.
Bullish momentum accelerated following Iranian President Masoud Pezeshkian’s address to the UN General Assembly, where he vowed Tehran would never surrender to Washington following US threats of military action. Hopes for a diplomatic breakthrough deteriorated further after Iranian security chief Mohsen Rezaei affirmed that the Strait of Hormuz would remain shut until US naval blockades and military pressures are fully lifted, eclipsing optimism from indirect bilateral discussions in New York.
However, stronger gains were capped by expanding physical export volumes and bearish US storage data. Saudi Arabia resumed operations on its East-West Pipeline to restore Red Sea loadings at Yanbu, while Iraq maintained exports above 3 million barrels per day. Upward momentum was further checked by the US Energy Information Administration reporting a 3-million-barrel build in domestic crude stockpiles, countering expectations of a 641,000-barrel draw.
Meanwhile, volatility in refined products curbed broader sentiment as US ultra-low-sulfur diesel futures dropped 5% amid conflicting reports regarding potential US fuel export bans. Despite refined product fluctuations, structurally elevated crude benchmarks continue to sustain intense feedstock cost-push inflation across downstream petrochemical cracking operations.
Written by: Aiman Haikal