Oil prices rose on Wednesday as doubts about a U.S.-Iran agreement grew and attacks on shipping routes heightened concerns over Middle East supply disruptions. Brent crude futures increased 75 cents, or 0.84%, to $89.66 a barrel. U.S. West Texas Intermediate gained 72 cents, or 0.87%, reaching $83.92.
Both contracts had earlier climbed more than $1 during the session, extending Tuesday’s gains. Those gains marked their highest closes since July 31. The rally followed a nearly 5% jump on Monday, spurred by fading hopes for a diplomatic solution after President Trump demanded Iran compensate victims of wars, attacks, and protests.
Shifting narratives keep markets volatile
Analysts described the Middle East situation as a constant shift between diplomacy and conflict, with oil prices fluctuating between $70 and $90 a barrel. Priyanka Sachdeva, head of market insights at Phillip Nova in Singapore, said the uncertainty had created a profitable environment for short-term traders. Markets may adjust to this weekly change in outlook.
Tensions worsened after the U.S. and Yemen’s Iran-aligned Houthis reported separate attacks on vessels in the Strait of Hormuz and the Bab el-Mandeb Strait. Iran’s top security official, Mohsen Rezaei, warned that the Strait of Hormuz would stay closed unless the U.S. met Tehran’s demands. Those demands included releasing frozen assets and ending regional conflicts.
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Trump’s comments in a Tuesday interview added to the uncertainty. He suggested the U.S. might either tolerate Iran’s actions or respond with force. This pattern of alternating threats and claims of an imminent deal has left traders unsure whether to expect a resolution or further escalation.
Shipping data showed growing concern. The number of vessels passing through the Strait of Hormuz fell to eight on Tuesday, down from a pre-war average of 125 to 140 per day. The strait handles about a fifth of global crude exports, making it a key route for oil shipments.
U.S. inventories rise, but long-term supply risks remain
While geopolitical tensions drove prices up, U.S. inventory data presented a mixed picture. A survey had predicted a decline in crude and fuel stocks last week. However, sources citing American Petroleum Institute figures reported a sharp increase in crude inventories—about 9.1 million barrels—alongside decreases in gasoline and distillate stocks.
The unexpected rise in crude stocks could ease concerns about supply shortages if confirmed by the U.S. Energy Information Administration later on Wednesday. The EIA, the statistical branch of the Department of Energy, was set to release official numbers at 10:30 a.m. ET.
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The market remains torn between immediate risks and future projections. The EIA has warned that disruptions to Middle East crude supplies could continue at around 600,000 barrels per day through the end of 2027. The region’s instability could have lasting effects on global oil markets.
Volatility stems not only from supply issues but also from the challenge of predicting political developments. Those who manage the swings may see opportunities, but for most, the unpredictability adds another layer of risk.
Prices follow a pattern: rising on threats, falling on diplomatic hopes, then rising again. The cycle will likely persist until either an agreement emerges or hostilities intensify.
