Oil Hits Multi-Week Highs as Mideast Tensions Fuel Supply Concerns

Oil prices extended their rally for a fourth straight day on Wednesday as escalating military conflict in the Middle East stoked investor fears about potential disruptions to global energy supplies. The gains pushed crude benchmarks to levels not seen since mid-June.

As of 20:43 ET (00:43 GMT), Brent crude futures for September delivery rose 0.6% to $91.55 per barrel, while West Texas Intermediate (WTI) crude futures advanced 0.4% to $84.69 per barrel, according to Investing.com data.

Geopolitical Risk Premium Grows

The upward pressure on prices is being driven by several concurrent geopolitical developments in the Middle East. U.S. forces reported conducting strikes against Iranian military targets for the 11th consecutive night, part of an intensifying campaign against Tehran. In response, Iran has continued retaliatory attacks on U.S. military positions in the region.

Adding to supply anxieties, Yemen's Iran-aligned Houthi movement has threatened a naval blockade targeting Saudi-linked vessels in the Red Sea. This has already prompted some oil tankers to reroute, raising concerns over potential delays and increased costs for exports from Saudi Arabia, one of the world's largest crude producers. These threats compound existing disruptions to maritime traffic near the critical Strait of Hormuz.

Ad

U.S. Inventory Data in Focus

Despite the bullish sentiment from geopolitical risks, inventory data from the U.S. presented a conflicting signal. The American Petroleum Institute (API) reported on Tuesday that U.S. crude stockpiles unexpectedly rose last week.

• API reported a crude inventory build of 2.603 million barrels.
• This defied analyst expectations for a draw of 1.5 million barrels.

This marked the first increase in U.S. crude inventories in two weeks. Market participants are now awaiting the official weekly inventory report from the U.S. Energy Information Administration (EIA) later on Wednesday, which is typically more influential on market direction.