Oil Tests New Highs as UAE Cuts Trade With Iran

Oil prices pushed to fresh highs Wednesday as the United Arab Emirates suspended all trade and financial transactions with Iran, a move that tightens the economic pressure on Tehran and raises the risk of a broader supply disruption in the Gulf.

WTI crude tested the $86.00–$86.50 resistance zone. Brent crude pushed above $91.00, its highest level in weeks. The rally followed news that Iran fired several missiles into the sea near the UAE late Tuesday. The UAE responded by halting commercial and financial flows with Iran, a critical channel for the Iranian economy which depends on Dubai as a transshipment hub for goods and hard currency.

Traders read the UAE move as a sign that Washington's campaign to isolate Iran is deepening. The U.S. has been pressing allies to enforce sanctions more aggressively while maintaining a naval blockade aimed at cutting off Iranian oil exports. The market's working assumption, several traders said, is that Iran will not return to negotiations soon and may instead escalate further to raise costs for the global economy.

“Iran cannot afford to wait until the economy collapses under sanctions and blockade,” one London-based crude trader said. “So they will likely try to escalate to raise costs for the rest of the world.”

The geopolitical bid overwhelmed a bearish EIA inventory report released Wednesday afternoon. U.S. crude stockpiles rose by 4.4 million barrels for the week ended March 22, the EIA said, compared with analyst expectations for a 600,000-barrel draw. Gasoline inventories increased by 700,000 barrels against a forecast 1.2-million-barrel decline. Distillate fuel inventories fell by 1.5 million barrels.

Crude imports averaged 6.6 million barrels per day, down 746,000 bpd from the prior week. Domestic production edged up to 13.830 million bpd from 13.805 million bpd. The Strategic Petroleum Reserve declined to 293.4 million barrels from 298.7 million barrels as the U.S. continued selling from the stockpile.

Despite the inventory build, the market focused on the supply risk in the Strait of Hormuz. WTI has room to run: RSI sits in moderate territory, leaving headroom if further escalation materializes. A settlement above $86.50 opens a path to $91.00–$91.50. For Brent, a clean break above $91.50 targets the $95.50–$96.00 zone, with $100.00 in play on a move above that.

Natural gas also gained, rising above the $2.75–$2.80 resistance as weather models showed above-normal temperatures across the southern U.S. keeping cooling demand elevated through early April. Gas settled near $2.85. A move above that level targets the 50-day moving average at $2.98 and then the $3.00–$3.05 resistance zone. On the downside, a drop back below $2.75 would send prices toward $2.70 and then $2.62.