Oil prices were steady in a volatile session on Thursday as traders assessed the escalating conflict between the United States and Iran and the potential disruption to oil supplies.
Brent futures LCOc1 were up 26 cents, or 0.29%, to $91.00 a barrel at 0956 GMT after touching a low of $89.02 earlier.
U.S. West Texas Intermediate (WTI) crude CLc1 was down 17 cents, or 0.20%, to $84.29 a barrel, off a session low of $83.21.
Middle East tensions keep supply risks in focus
Geopolitical tensions continued to simmer after the U.S. military said it had hit dozens of Islamic Revolutionary Guard Corps targets in Iran, including military command centres and drone facilities, in a two-hour operation launched after Tehran fired ballistic missiles at U.S. forces in the Middle East.
"Until safe passage through the Strait of Hormuz is no longer a gamble, the risk premium in oil is not going anywhere — hope for diplomacy is welcome, but the market is pricing the reality of ongoing strikes," said Tim Waterer, chief market analyst at KCM Trade.
The Strait of Hormuz, which normally handles around a fifth of global oil and gas flows, has remained a focal point for oil markets since the conflict began on February 28.
"Even though crude continues to move through alternative routes, transit through the Strait of Hormuz remains something of a roll of the dice at best ... Safe passage is far from assured while hostilities continue," Waterer added.
Analysts said investor focus was on the volume of oil exiting key chokepoints and the possibility of a diplomatic breakthrough.
Iran's Fars news agency said a Qatari LNG tanker passed through the Iran-designated route in the strait with Tehran's permission.
The Al Areesh tanker, which loaded a cargo at Qatar's Ras Laffan terminal around July 4 to 6, sailed out of the strait overnight on July 29, according to Kpler and LSEG data.
The conflict has also disrupted shipping through the Bab el-Mandeb strait, creating a second pressure point for global oil flows alongside the Strait of Hormuz.
Shipping disruptions add to pressure on oil flows
Yemen's Houthi group is considering imposing fees on commercial ships sailing through the southern Red Sea, a week after declaring a naval blockade on Saudi Arabia, regional sources with knowledge of the matter told Reuters.
In another blow to supply, tankers planned for loading at the Caspian Pipeline Consortium (CPC) terminal are heading away from the Black Sea after a vessel was hit during loading at the terminal on Thursday, two sources said and shipping data showed.
"Given the disruption to flows through several maritime chokepoints, as well as the rapid depletion of oil inventories, prices could feasibly be even higher than where they sit currently," said Capital Economics' analyst Hamad Hussain in a note.
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