Oil Edges Higher on Middle East Tensions; Kospi Jumps

Oil prices edged higher on Wednesday. Geopolitical uncertainty in the Middle East showed no sign of easing. Iran's Supreme National Security Council Secretary Mohsen Rezaei reiterated that the Strait of Hormuz would remain closed until the United States changed its behaviour and accepted Iran's conditions. Fresh reports emerged of vessels targeted in the Bab al-Mandab strait and the Gulf of Oman, extending a pattern of attacks beyond the Strait of Hormuz itself.

President Trump offered a different assessment. He told reporters after a trip to Ohio that matters with Iran are going fine, absolutely fine. Pressed on whether that suggested he trusted Tehran, he said he remained the last person who would trust Iran, citing a pattern of broken commitments. He claimed the United States currently holds total control over the Strait of Hormuz, adding that Iran lacks control and that the US effectively owns the waterway. He said Iran might eventually attempt something, in which case it would be met with force. He characterised the current US position as a strong one. Those remarks stand in contrast to the reported situation on the ground, where shipping through the strait remains severely curtailed and attacks on vessels have continued in the surrounding waters.

Separately, a private survey of US crude inventories pointed to a substantially larger build than expected. American Petroleum Institute data showed crude stockpiles rose by just over 9 million barrels in the week to August 7, against expectations for a roughly half a million barrel draw. The large miss will be tested against official Energy Information Administration figures due Wednesday morning in the US.