UAE cuts economic ties with Iran after missile accusations
Oil futures extended a multi-day rally on August 20, 2026, after President Donald Trump announced that the United States would impose “unprecedented economic measures” on Iran and warned of economic consequences for any country that provided Iran with what he called a financial lifeline. In late-morning trading, most-active WTI crude futures rose 3.6% to $87.43 a barrel, while Brent crude gained 3.1% to $94.47. The moves marked a fourth consecutive session of gains for both benchmarks.
Scott Shelton of TP ICAP wrote in a note that financial support for Iran essentially means buying its oil and would primarily involve China. He said he worried about unintended consequences: “I worry a bit about unintended consequences, however, as this could mean the Chinese buy even less total oil from the market, cut runs even more, and export even less.”
The Strait of Hormuz remains a focal point. The United Arab Emirates said it was cutting all economic ties with Iran after accusing it of firing ballistic missiles at its territory. ANZ Research analysts noted that “while U.A.E.’s energy infrastructure was not targeted, it closes another potential avenue for diplomatic efforts to end the conflict and reopen the Strait of Hormuz.” The strait handles roughly one-fifth of the world’s oil, according to the analysts.
In the prior session, oil had already settled higher as transit remained restricted. WTI settled up 1% at $85.83 a barrel, while Brent rose 0.7% to $91.62 — both well off their intraday highs. EIA data released that day showed U.S. commercial crude stockpiles rose by 4.4 million barrels in the week prior to 428.8 million barrels, bringing inventories in line with their five-year average for the time of year.
Ritterbusch & Associates said the elimination of the longstanding crude deficit “would appear price-neutral if not for the continued sizable deficits in the product markets.” The firm added that “WTI can be pulled higher by a strong distillate market since key refiners beyond the East and West coasts that represent about 80% of U.S. capacity are still running virtually full-out.”
Analysts also issued updates on individual energy companies. BofA analyst Cian Evans-Cowie wrote that Ithaca Energy can return more to shareholders even after raising its full-year dividend guidance. The company now targets a dividend of $500 million to $530 million, up from its prior range of $470 million to $520 million. Higher production from organic growth projects and a cashflow-linked payout policy could push the dividend higher, Evans-Cowie said. Ithaca Energy shares rose 2.5% to 264 pence.
Phillip Securities Research analyst Paul Chew said Sembcorp Industries could have several drivers to support a second-half recovery after its first-half results came in below expectations. Chew expects the Singapore energy company to benefit from commercialization of its 600 megawatt power plant in the second half, with monetization of excess gas and a land sales pipeline also contributing to earnings. He flagged that the renewable energy segment is seasonally weaker in the second half and that certain challenges in China remain. Phillip Securities Research raised its rating on Sembcorp to buy from accumulate and lifted its target price to 7.21 Singapore dollars from S$7.00, factoring in contributions from Sembcorp’s acquisition of Alinta Energy. Sembcorp shares declined 0.5% to S$6.01.