Oil prices climbed to a three-week high on Wednesday as concerns over shipping safety in the Strait of Hormuz and ongoing global supply disruptions intensified.

Brent crude oil futures rose 45 cents, or 0.49%, to $91.47 a barrel by 0754 GMT. US West Texas Intermediate (WTI) crude futures also gained 45 cents, or 0.53%, to $85.39 a barrel, Reuters reported. Brent reached its highest level since July 30, while WTI touched its highest level since July 31, Hindustan Times reported.

The rise came mainly because traders are still unsure whether ships can safely travel through the Strait of Hormuz. “Confidence in safe passage remains low,” said Tim Waterer, chief market analyst at KCM, according to Reuters. He said shipping volumes remain far below normal levels and this uncertainty is keeping an extra geopolitical risk premium in oil prices. The geopolitical risk premium means traders are paying more for oil because they fear that the conflict could disrupt supplies.

US President Donald Trump said on Tuesday that no talks were taking place with Iran. He also said the Strait of Hormuz was open, according to Reuters. Iran gave a different account, saying that the waterway remained shut. The uncertainty increased after a temporary ceasefire agreement expired on Monday.

A senior Iranian official told Reuters that Iran was moving towards a “fully offensive” military posture because diplomatic efforts had reached a stalemate. However, there were no reports of strikes by either side on Tuesday, Reuters reported.

Strait of Hormuz Remains the Key Concern

The Strait of Hormuz is one of the world's most important energy routes because a huge amount of oil and liquefied natural gas passes through it. Before the US-Israeli war on Iran began at the end of February, the waterway carried about one-fifth of global oil and liquefied natural gas supplies, Reuters reported.

Any major disruption in the Strait of Hormuz can therefore create serious concerns about global energy supplies and push oil prices higher. Commercial shipping through the waterway remains heavily disrupted, said Ahmad Assiri, research strategist at brokerage Pepperstone. Assiri said disagreements over the conditions for ships to use the waterway are still continuing, keeping pressure on shipping activity.

Shipping through the Strait of Hormuz slowed further on Wednesday, data showed. Most shipowners were avoiding the waterway because they were not confident about the safety and conditions for ships travelling through it, Reuters reported. The continued slowdown in shipping is important for oil markets because fewer ships moving through the route can increase fears about supply shortages.