Oil futures extended gains in Asian trade on Wednesday as renewed conflict in the Middle East and stalled communications between the U.S. and Iran kept geopolitical risk premiums elevated. Traders also reacted to industry data showing a sizeable decline in U.S. crude inventories.
As of 20:23 ET (00:23 GMT), Brent futures for August delivery were up 1.1% at $97.01 per barrel, while West Texas Intermediate crude rose 1.1% to $94.76 per barrel. Both benchmarks had already climbed by more than 1% in the previous session.
Market attention remained fixed on events in the Middle East after hopes for a breakthrough in talks between the U.S. and Iran faded. Israel continued military operations in southern Lebanon, and Kuwait reported that its air defenses had intercepted hostile missile and drone attacks.
In addition, the U.S. Central Command said in a post on X that U.S. forces carried out strikes on Iran's Qeshm Island. The island lies close to the Strait of Hormuz, a strategic waterway through which roughly one-fifth of the world's oil consumption passes.
Reports indicated that communication between Washington and Tehran had stalled in recent days, even as U.S. President Donald Trump maintained that negotiations were continuing. Iranian media expressed skepticism about the prospects for a near-term agreement, a development that traders interpreted as a reason to assign a higher geopolitical risk premium to prices.
Diplomatic activity in the region continued on other fronts as well, with another round of talks involving Israel and Lebanon scheduled for Wednesday.
On the supply side, industry group American Petroleum Institute data showed U.S. crude inventories fell by 6.8 million barrels in the week ended May 29, a draw that significantly exceeded market expectations for a decline of 3.6 million barrels. That larger-than-expected draw added to the bullish tone in the oil market.
Market participants are now awaiting official inventory figures from the U.S. Energy Information Administration, which were due later on Wednesday.
Market context
- Prices advanced in Asian trading, reflecting both geopolitical developments and inventory data.
- Geopolitical events cited in reports included Israeli operations in southern Lebanon, Kuwait's interception of hostile attacks, and U.S. strikes on Qeshm Island.
- Industry data showed a U.S. crude stock draw of 6.8 million barrels for the week through May 29, versus an expected 3.6 million-barrel decline.