Oil prices edged higher on Wednesday morning amid fading hopes for a US-Iran peace deal and shipping attacks in the Middle East that fuelled supply disruption concerns. Brent futures gained 72 cents, or 0.81%, to $89.63 a barrel by 0053 GMT, while US West Texas Intermediate (WTI) crude climbed 71 cents, or 0.85%, to $83.91. Both benchmark contracts settled more than $1 higher on Tuesday, marking their highest closes since July 31 and extending gains after jumping about 5% on Monday.

The United States and Yemen's Iran-aligned Houthis reported separate attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday. Iran's top security official, Mohsen Rezaei, stated on Tuesday that the vital Strait of Hormuz shipping route would remain closed unless the US accepted Iran's conditions for ending the war, including the release of frozen Iranian assets and an end to other regional conflicts. Shipping data showed traffic through the Strait of Hormuz dropped to six vessels on Monday, down from a 10-day average of about 11 and a pre-war daily average of 125 to 140 vessels.

Market sources citing American Petroleum Institute data said US crude inventories rose sharply by about 9.1 million barrels in the week ended August 7, while gasoline and distillate stocks fell by 1.5 million barrels and 596,000 barrels respectively. Haitong Futures noted that if the crude build is confirmed by the Energy Information Administration (EIA) report due at 10:30am ET (1430 GMT) on Wednesday, it could ease market concerns about supply tightness.

Looking at longer-term supply, the EIA projected that disruptions of about 600,000 barrels per day to Middle East crude oil supplies will persist through the end of 2027.