Crude oil prices hit a five-month high Tuesday morning before reversing gains, as conflict in the Middle East continued to simmer.
Brent crude hit over $111 per barrel before dropping later in the morning. West Texas Intermediate reached over $100 a barrel, then pared gains, too.
As of the early afternoon, Brent crude was down about 1% at $108 per barrel, while WTI was down 0.65% at $103 a barrel.
The fluctuations came as traders were weighing the latest in the Middle East — from the prospects for a diplomatic solution to the Iran conflict to ongoing Houthi attacks on Saudi Arabia.
Meanwhile, gas has actually gone down a few cents, to $4.28 per gallon, according to AAA.
“Gas prices aren’t budging much as crude oil prices remain high,” the group said earlier this month.
“The national average has stayed above $4 per gallon since late July and is currently more than a dollar higher than it was this time last year.”
Deutsche Bank analysts told the Wall Street Journal that odds of a diplomatic resolution to the Iran war were low. The conflict has caused chaos in the Strait of Hormuz as attacks on cargo ships reportedly continue.
Insurance premiums that are built into oil prices have been going up due to the uncertainty, ING analysts told the Wall Street Journal.
Twenty-four oil tankers were targeted in the strait last week, according to the Financial Times. Meanwhile, record-high freight rates are adding to companies’ transportation costs, the ING analysts said.
Letting sanctioned tankers into the shipping market — a controversial step — could help lower freight costs, they added.
About 1,600 idle sanctioned ships are set to be allowed to carry legal oil, Energy Secretary Chris Wright said at a Citadel Securities event on Monday.
He said it was not a removal of sanctions, but a way of giving non-sanctioned companies access to more tankers.
“We’re going to move ships from the bad guy fleet to the good guy fleet,” Wright added.
Further details were not immediately known.
In addition to shipping attacks in the Strait of Hormuz and the war in Iran, investors have had their eyes on the Russia-Ukraine war.
Over the weekend, Ukraine hammered an oil export terminal and a depot in St. Petersburg, Russia, after President Trump announced plans to ease sanctions on Russian oil. The commander-in-chief has cast his change in sanctions policy as a way to ease the global oil market, though Ukraine’s President Volodymyr Zelenskyy has decried the move as a “historic mistake.”