Oil prices remained largely steady on Wednesday as investors assessed the latest exchange of military action between the United States and Iran, while stronger-than-expected declines in U.S. crude inventories offered support to the market.
By 05:47 ET (09:47 GMT), Brent crude for August delivery was little changed at $91.40 a barrel, while U.S. West Texas Intermediate crude held near $88.19 a barrel. Both benchmarks had advanced earlier in Asian trading following renewed tensions across the Middle East.
The muted performance followed a sharp decline of roughly 3% in the previous session, which pushed oil prices to their lowest levels in seven weeks.
Traders Take a Measured View of Renewed Conflict
Iran said it had launched strikes against U.S. military facilities in Jordan and several Gulf nations in retaliation for recent American military action.
The U.S. strikes followed the destruction of an Apache helicopter, an incident Washington attributed to an Iranian drone attack. Tehran has denied responsibility for bringing down the aircraft.
Meanwhile, Israeli forces continued operations in southern Lebanon against Hezbollah militants supported by Iran.
The latest developments raised questions over the durability of recent diplomatic progress after Iran and Israel agreed earlier this week to suspend hostilities following calls from President Donald Trump.
However, market participants appeared reluctant to price in a major escalation.
“markets don’t consider the exchange of fire between Washington and Tehran over the last [roughly] 48 hours to be a significant event, as evidenced by the very muted reaction in oil,” analysts at Vital Knowledge said.
They also pointed to comments from a White House official quoted by Politico, who characterized the latest developments as a “bump in the road toward peace.”
Focus Remains on the Strait of Hormuz
Investors continue to monitor negotiations that could eventually lead to a broader peace agreement between Washington and Tehran and result in the reopening of the Strait of Hormuz.
The passage handles approximately 20% of global oil flows and has effectively remained closed to normal tanker traffic for several months.
The disruption has kept oil prices elevated compared with levels seen before the conflict, raising concerns that higher energy costs could contribute to inflation and influence monetary policy decisions worldwide.
The release of U.S. inflation figures later in the day is expected to provide additional insight into the economic impact of sustained energy price pressures.
Large U.S. Inventory Draw Supports Prices
Further support came from industry figures showing a significant reduction in U.S. crude inventories.
The American Petroleum Institute reported that crude stockpiles declined by 9.12 million barrels during the previous week, substantially more than forecasts for a 3.4 million-barrel decrease.
Gasoline inventories fell by 1.19 million barrels, while distillate supplies increased by 1.32 million barrels.
Attention now turns to official inventory figures from the U.S. Energy Information Administration, which are scheduled for release later on Wednesday.
More about the Oil Market
Oil markets are currently being shaped by a combination of geopolitical developments, supply concerns and inflation expectations. Movements in crude prices remain closely tied to events in the Middle East, inventory trends and economic indicators that could influence future central bank decisions.
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