Oil prices climbed more than 3 per cent in early Asian trade on Wednesday after the US military said it had intercepted multiple missiles launched by Iran, reviving concerns over the security of global
crude supplies and triggering a sharp rebound in energy markets.
Brent crude futures rose 3.2 per cent to $86.80 a barrel, while US benchmark West Texas Intermediate (WTI) gained 3.4 per cent to $81.95 in early trade, according to Reuters.
The gains reversed a steep decline in the previous session, when prices had fallen on hopes that diplomatic efforts could ease tensions between Washington and Tehran.
OIL PRICES RISE: WHAT IS DRIVING THE LATEST RALLY?
The immediate trigger for the price jump was a statement from the US military saying it had intercepted multiple missiles launched by Iran.
According to AFP, the development renewed market concerns over the possibility of further conflict in the Middle East, a region that accounts for a significant share of global oil production and exports.
Reuters reported that prices also found support from fresh supply data in the United States.
The American Petroleum Institute (API) estimated that US crude inventories fell by about 3.3 million barrels in the week ended July 24, indicating tighter supplies.
Official inventory figures from the US Energy Information Administration (EIA) are due later on Wednesday.
Adding to the bullish sentiment, Reuters reported that OPEC+ is likely to pause planned oil production increases for three months beginning in October, once the producer group completes the scheduled return of barrels following voluntary output cuts.
MIDDLE EAST CONFLICT CONTINUES TO SHAKE ENERGY MARKETS
The latest price movement comes after a brief pause in hostilities between the United States and Iran had raised hopes that tensions could ease.
However, the US military said Tuesday that it intercepted all Iranian missiles launched toward American forces in the Middle East.
Separately, US and Saudi forces carried out strikes on sites in eastern Iraq that Washington says were being used by Iran-backed militias to launch attacks.
The renewed military activity has once again shifted investor focus to the security of energy supplies in the Gulf.
STRAIT OF HORMUZ REMAINS IN FOCUS
One of the biggest concerns for oil markets remains the Strait of Hormuz, through which a significant portion of the world’s traded crude oil passes.
The conflict has disrupted global crude flows, particularly following the effective closure of the strategic waterway.
Reuters also reported that Oman has proposed a framework to manage shipping through the strait, including a system of voluntary transit fees, as Gulf states seek to restore normal trade.
The rally marks a dramatic reversal from Tuesday, when oil prices dropped nearly 5 per cent after optimism emerged that Washington and Tehran could resume negotiations.
US President Donald Trump said there had been “good talks” with Iran but warned that further military action remained possible if diplomacy failed.
Iran, however, denied reports that it was seeking to restart negotiations with the United States, according to Reuters.
The conflicting signals have kept markets volatile, with traders closely tracking both military developments and diplomatic efforts.
