Crude oil prices increased on Wednesday as investors monitored the security situation in the Middle East and a larger-than-expected reduction in US oil inventories. Concerns about shipping through the Strait of Hormuz remained a focus amid uncertainty surrounding the conflict involving Iran.
Brent crude futures rose 1.1% to $109.96 per barrel at 05:28 ET (09:28 GMT), while West Texas Intermediate (WTI) futures gained 1.2% to $99.01 per barrel.
The gains followed renewed reports about the possibility of further military operations against Iran, alongside continued concerns about the movement of oil shipments through one of the world’s principal energy transportation routes.
Reports of Possible Israeli Offensive Add to Supply Uncertainty
Israeli Prime Minister Benjamin Netanyahu is seeking to restart large-scale military strikes against Iran, according to a report published by the Financial Times on Wednesday.
The newspaper said Netanyahu had instructed the Israeli military to prepare another offensive earlier in October. Those plans were not implemented after US President Donald Trump called for attacks on Iran to be suspended until after the November US midterm elections, according to the report.
The prospect of renewed hostilities has kept attention on the Strait of Hormuz, where maritime traffic has faced restrictions since the conflict began in February.
Any further disruption to shipping could affect the movement of crude oil and other energy products from the Middle East.
Oil prices had briefly fallen on Tuesday after unconfirmed reports suggested that Qatar and Pakistan had proposed restarting negotiations to end the conflict.
Brent declined from approximately $112 to $106 per barrel following those reports, before recovering as doubts emerged about the prospects for an agreement.
The subsequent increase followed reports of remarks attributed to Iran’s president suggesting that the United States might carry out further attacks if negotiations resumed.
Shipping Security Remains a Concern in the Strait of Hormuz
Iranian media reported on Tuesday that another supertanker had caught fire in the Strait of Hormuz, citing the Islamic Revolutionary Guard Corps.
The report followed other incidents affecting commercial shipping in the area during recent weeks.
Fighting involving Saudi Arabia and Yemen’s Iran-backed Houthi movement has also contributed to uncertainty over regional energy transportation.
David Morrison, senior market analyst at Trade Nation, highlighted the relationship between prolonged hostilities and the availability of emergency oil reserves.
“Oil prices have stayed relatively subdued given the supply risks. But as hostilities drag on, and as it’s no longer possible to draw on significant strategic reserves, there’s a danger that crude prices become unanchored,” Morrison said.
Despite the conflict, Gulf oil exports have exceeded pre-war levels, according to shipping data from Kpler cited by The Wall Street Journal.
The report indicated that US efforts to provide security for vessels crossing the Strait of Hormuz have helped maintain shipments.
However, the newspaper also identified uncertainty about whether current export volumes can be sustained and the financial costs associated with protecting commercial shipping.
API Reports Larger-Than-Expected US Crude Inventory Draw
Figures released by the American Petroleum Institute showed that US crude inventories fell by 4.93 million barrels in the week ended 16 October.
Analysts had expected a reduction of approximately 1.3 million barrels, making the reported decline considerably larger than forecast.
The figures followed two weeks of substantial inventory withdrawals, during which oil production along the US Gulf Coast was affected by Hurricane Isaias.
The latest report provided an additional indication of reduced commercial crude supplies in the United States.
Official government inventory data are scheduled for release later on Wednesday, with market expectations pointing to a decline of around 300,000 barrels.
Although API figures are closely followed by oil traders, they do not necessarily match the official inventory report because the two datasets use different reporting sources and methodologies.
The inventory reductions have occurred while the US Strategic Petroleum Reserve remains at its lowest level in 44 years, following months of emergency withdrawals intended to address disruptions in global energy supplies.
The reduced availability of strategic reserves has added another consideration for market participants assessing the ability of oil supplies to respond to further disruptions.
Oil markets therefore entered Wednesday’s session with attention divided between geopolitical developments, maritime security in the Middle East and changes in US crude stockpiles.
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