Oil Prices Climb as Middle East Tensions Rise and U.S. Stockpiles Drop

Oil Futures Extend Gains on Geopolitical Risks

As of 02:21 ET (06:21 GMT) on Wednesday, Brent Oil Futures expiring in August rose 1.5% to $97.46 per barrel, while West Texas Intermediate (WTI) crude futures climbed 1.6% to $95.23 per barrel. Both benchmarks had already gained more than 1% in the previous session.

Investor attention remained on the Middle East after hopes for a breakthrough in U.S.-Iran talks faded. Israel continued military operations in southern Lebanon, while Kuwait reported that its air defenses intercepted hostile missile and drone attacks from Iran.

Additionally, the U.S. Central Command stated in a post on X that U.S. forces carried out strikes on Iran’s Qeshm Island. The island is located near the Strait of Hormuz, a crucial waterway through which roughly one-fifth of global oil consumption passes. Reports indicated that communication between Washington and Tehran had stalled in recent days, even as U.S. President Donald Trump maintained that negotiations were continuing. Iranian media expressed doubt about the likelihood of a near-term agreement, contributing to a higher perceived geopolitical risk premium in oil prices.

Another round of talks involving Israel and Lebanon is scheduled for Wednesday, adding further focus on regional developments.

U.S. Inventory Draw and Economic Data in Focus

Oil prices were further supported by industry data pointing to a larger-than-expected decline in U.S. crude stockpiles. According to the American Petroleum Institute, U.S. crude inventories fell by 6.8 million barrels in the week ended May 29, compared with expectations for a draw of 3.6 million barrels.

Market participants are now awaiting official inventory figures from the U.S. Energy Information Administration, due later on Wednesday, for confirmation of the industry data. The trajectory of oil prices may also be influenced by a series of U.S. macroeconomic indicators scheduled for release the same day, including the ADP employment report, the ISM services survey, and factory orders.

These data points precede Friday’s closely watched nonfarm payrolls report, which could further shape expectations for economic activity and energy demand.

FAQ

What are current Brent and WTI prices mentioned?
Brent Oil Futures expiring in August are reported at $97.46 per barrel, and WTI crude futures at $95.23 per barrel as of 02:21 ET (06:21 GMT) on Wednesday.

How much did U.S. crude inventories decline according to the API?
The American Petroleum Institute reported a decline of 6.8 million barrels in U.S. crude inventories for the week ended May 29, compared with expectations for a 3.6 million-barrel draw.

What geopolitical events are influencing oil prices?
Key factors include continued Israeli military operations in southern Lebanon, Kuwait’s interception of hostile missile and drone attacks from Iran, U.S. strikes on Iran’s Qeshm Island near the Strait of Hormuz, and stalled communications between Washington and Tehran regarding negotiations.