Crude prices climbed strongly on Wednesday during Asian trading, supported by escalating frictions between the United States and Iran that have renewed fears of supply disruptions in the Middle East. Gains were reinforced by industry figures pointing to an unexpectedly large decline in U.S. crude inventories, after extreme winter conditions curtailed output.
Brent crude for April delivery rose 1.2% to $68.15 a barrel, while U.S. West Texas Intermediate advanced 1.4% to $63.69 a barrel by 21:01 ET (02:01 GMT).
Geopolitical flare-ups add risk premium to oil
Market concerns intensified after reports that U.S. forces downed an Iranian drone approaching an American aircraft carrier in the Arabian Sea. Separately, Iranian patrol boats were said to have moved toward a U.S.-flagged tanker in the Strait of Hormuz, one of the world’s most critical oil transit corridors.
The incidents came just ahead of planned talks between Washington and Tehran later this week. However, doubts have emerged after Iranian officials reportedly sought to restrict the scope of the negotiations—scheduled for Friday—to bilateral discussions focused solely on nuclear issues, casting uncertainty over whether the talks will proceed.
U.S. President Donald Trump has warned of further military action should Iran refuse to comply with U.S. demands to scale back its nuclear program, while Tehran has threatened severe retaliation in response to any American aggression. Any escalation in the region could jeopardize crude flows from the Middle East, a risk that has continued to underpin oil prices.
Unexpected U.S. inventory draw adds support
Oil markets also drew strength from data showing a much steeper-than-expected decline in U.S. crude stockpiles. Figures from the American Petroleum Institute indicated that inventories fell by 11.1 million barrels in the week ended January 30, compared with expectations for a 0.7 million-barrel increase.
API figures often provide an early signal of trends in official government inventory data, which are due later in the day. The sizable draw was attributed to severe cold weather across parts of the United States, which disrupted oil production and hampered exports from the Gulf Coast.
Supply interruptions in the U.S. have been an additional tailwind for crude prices in recent weeks, reinforcing gains driven by heightened geopolitical risk.
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