Oil futures made modest gains in Asian trade on Wednesday, recovering from a recent two-month trough as traders continued to monitor developments in the U.S.-Iran conflict and domestic inventory signals.
By 20:38 ET (01:38 GMT), Brent futures for January delivery were trading 0.5% higher at $92.02 a barrel, while West Texas Intermediate crude futures were up 0.3% at $86.34 a barrel.
Market sentiment had pushed oil prices lower on Tuesday, extending a slide that brought benchmarks to their lowest levels in two months amid growing views that a Democrat-led U.S. Congress could exert pressure on Washington to end the conflict with Iran. This perception of increasing political pressure contributed to a lower risk premium in crude markets.
U.S. political signals have added to the market narrative. U.S. President Donald Trump this week signaled a degree of restraint toward Iran, downplaying the need for further military strikes. At the same time, an effort to impeach Defense Secretary Pete Hegseth over his handling of the Iran war largely failed on Tuesday evening when House of Representatives Republicans voted down the proposal.
Despite these indications, Iran stated earlier in the week that no peace talks were ongoing, even as the U.S. president met with Qatari officials to discuss further mediation efforts. The diplomatic picture remains mixed, and markets are treating statements and meetings as potential but uncertain inputs to future oil risk premia.
On the ground, tensions persisted. Three tankers were observed catching fire in the Strait of Hormuz over the weekend, and fighting continued this week between Saudi Arabia and Yemen’s Iran-backed Houthi forces. At the same time, other data pointed to elevated maritime activity - oil and gas transits through the Strait of Hormuz reached their highest level since the conflict began in February - and a Reuters survey indicated that OPEC production has been increasing despite disruptions in the Middle East.
Inventory data added another influence on prices. The American Petroleum Institute reported that U.S. oil stocks fell by 9.8 million barrels in the week to November 6, a draw considerably larger than the 1.0 million-barrel decline expected by the market. The API release is often a precursor to the official government inventory report, which was scheduled for later on Wednesday and could confirm the same trend.
Overall, the market is navigating a mix of softer geopolitical risk perceptions driven by political signals and diplomatic engagement, counterbalanced by tangible supply-side incidents and a surprisingly large draw in U.S. inventories. Traders and analysts will be watching the official inventory print and any further developments in diplomacy or regional conflict for the next cues on crude direction.