Just when it looked like oil prices might be settling down, Brent crude has made its way back towards US$103 a barrel.
As of Thursday morning, the global benchmark is trading at approximately US$102.92, while West Texas Intermediate (WTI) is changing hands at US$92.26.
Brent slipped below US$98 on Tuesday amid signs of improving Middle Eastern oil supplies, but it didn't stay there long.
According to Trading Economics, Brent has gained around 11.7% over the past month and more than 48% over the past year.
That puts US$110 less than 7% away.
So, what's driving the rebound?
Image source: Getty Images
Oil supply disruptions continue
Shipping through the Strait of Hormuz is still a long way from normal, and that's keeping oil traders on edge.
According to Reuters, just 3 commodity vessels passed through the waterway on Tuesday, compared with 4 on Monday.
That's 80% below the 10-day average of approximately 15 vessels.
All 3 were heading out of the Strait, although the figures don't include ships travelling with their tracking systems switched off.
Before the conflict, approximately 1/5th of global oil and gas flows passed through the waterway.
With traffic still so low, getting oil out of the region remains difficult, and thus helps keep prices elevated.
Saudi Arabia gets oil moving again
There has been some good news on the supply side, with Saudi Arabia restarting its East-West oil pipeline.
This comes after drone attacks forced its closure earlier this month.
The pipeline had been transporting around 4 million barrels per day to the Red Sea port of Yanbu.
However, operations have only resumed at a reduced capacity of late.
It could apparently take another 6 to 8 weeks before the pipeline is fully operational again.
US oil inventories rise unexpectedly
The latest US inventory figures weren't quite what analysts had expected.
The Energy Information Administration (EIA) reported that crude inventories increased by 3 million barrels to 426.4 million barrels last week.
Analysts had expected a decline of approximately 641,000 barrels.
Fuel stockpiles moved in the opposite direction, though.
Gasoline stockpiles fell by 1.7 million barrels. Distillate inventories, including diesel and heating oil, declined by 400,000 barrels.
US refineries also processed 519,000 fewer barrels per day, with utilisation falling to 94%.
Could Brent hit US$110?
I think US$110 is within reach, although much depends on what happens next between the US and Iran.
Just yesterday, Iranian President Masoud Pezeshkian said Tehran would not surrender to the US, but remained open to diplomacy.
Meanwhile, a senior Iranian official told Reuters that the Strait of Hormuz could reopen within 7 days if Washington eased military pressure.
The next level I'll be watching is US$105. A move through there would put US$110 right in my view.
I expect more volatility along the way for now, but I do think oil prices have further to climb.
