Oil prices climbed sharply on Wednesday after the United States and Saudi Arabia carried out joint strikes against Iran-backed groups in Iraq.
Fresh Iranian missile attacks targeting U.S. forces also renewed fears that the conflict in the Middle East could escalate and disrupt global energy supplies.
Crude prices received additional support from a larger-than-expected decline in U.S. inventories and reports that OPEC+ may pause planned production increases from October.
Brent crude futures rose 3.6% to $87.08 per barrel, while West Texas Intermediate futures gained 3.4% to $81.99 per barrel.
Both benchmarks recovered after falling by approximately 15% over the previous three trading sessions.
Middle East Tensions Lift Oil Prices
The latest oil rally followed U.S. and Saudi strikes against Iran-backed groups operating in Iraq.
Washington and Riyadh blamed the groups for recent drone attacks on Saudi oil facilities. However, Tehran rejected the accusations and warned that connecting Iran to the attacks was a serious miscalculation.
The strikes came after the U.S. military intercepted several Iranian ballistic missiles aimed at American forces in the region.
These developments increased concerns that the recent pause in direct hostilities could quickly collapse.
Diplomatic Hopes Begin to Fade
Markets had previously become more optimistic about a possible diplomatic breakthrough.
That optimism followed a meeting between Israeli Prime Minister Benjamin Netanyahu and U.S. President Donald Trump in Washington.
Trump later said there was a strong possibility that discussions with Iran could make progress.
However, Tehran denied that it was seeking negotiations or a ceasefire, creating uncertainty over whether diplomatic efforts could reduce tensions.
Strait of Hormuz Remains a Major Risk
The Strait of Hormuz continues to be one of the oil market’s biggest concerns.
ANZ analysts said attempts to restore normal operations through the strategic waterway had made limited progress.
Iran reportedly rejected an Omani proposal supported by Gulf countries. The plan would have created a joint framework for managing shipping traffic through the strait.
Only five commodity vessels reportedly passed through the Strait of Hormuz on Tuesday.
The low level of tanker traffic highlighted ongoing concerns about the movement of oil and other energy products through the region.
Energy Infrastructure Faces Growing Threats
Threats to oil facilities across the Middle East also remain elevated.
Recent attacks on Saudi energy infrastructure have increased fears that further escalation could affect production, exports or transportation routes.
Any meaningful disruption in the region could quickly tighten global oil supplies and place additional upward pressure on prices.
The Strait of Hormuz is especially important because a significant share of global crude exports passes through the waterway.
U.S. Crude Inventories Fall Sharply
Oil prices also benefited from signs of tightening supply in the United States.
The American Petroleum Institute reportedly estimated that U.S. crude inventories fell by approximately 3.3 million barrels during the previous week.
The decline suggested that demand remained resilient despite uncertainty surrounding the global economy.
Investors are now waiting for official inventory figures from the U.S. government, which are due later on Wednesday.
A larger-than-expected decline could provide further support for oil prices.
OPEC+ May Pause Production Increases
Reports that OPEC+ could delay further production increases also improved market sentiment.
The producer group is reportedly considering pausing additional output increases for three months beginning in October.
The possible pause would follow the planned restoration of voluntary production cuts.
Limiting supply growth could help stabilize crude prices after the recent sharp decline.
Oil Recovers From Three-Day Selloff
Wednesday’s rebound followed three consecutive sessions of heavy losses.
WTI crude had fallen approximately 15% from Friday’s intraday high of around $93.50 per barrel.
Traders reduced bullish positions as hopes grew that diplomatic talks could ease tensions between Washington and Tehran.
However, the latest missile attacks and military strikes weakened those expectations and brought geopolitical supply risks back into focus.
Supply Risks Could Drive the Next Oil Move
Oil prices are now being supported by several factors.
Escalating Middle East tensions, reduced shipping activity through the Strait of Hormuz, falling U.S. inventories and the possibility of an OPEC+ production pause have all strengthened the market.
Nevertheless, crude prices remain highly sensitive to diplomatic developments.
Progress toward a ceasefire could reduce the geopolitical risk premium. Further military escalation or attacks on energy infrastructure could push oil prices higher.
