Oil Prices Edge Higher as Gulf Tensions Disrupt Supplies

Oil prices climbed about 1 percent on Wednesday as US and Israeli strikes on Iran continued to disrupt energy supplies across the Middle East, although gains eased after President Donald Trump indicated the US Navy could escort vessels through the Strait of Hormuz.

Brent crude rose 91 cents, or 1.1 percent, to $82.31 a barrel by early afternoon Saudi time, extending gains after closing at its highest level since January 2025 in the previous session. US West Texas Intermediate crude increased 63 cents, or 0.8 percent, to $75.19 a barrel after settling at its strongest point since June.

Analysts said the conflict between Washington and Tehran remains the key driver of price movements. Kelvin Wong, senior market analyst at OANDA, said only clear signs of de-escalation would likely reverse the current upward trend in US crude prices. He noted that such signals have yet to emerge.

Israeli and US forces struck targets across Iran on Tuesday, prompting Tehran to respond with attacks on energy infrastructure in a region responsible for just under one-third of global oil output. The exchange has heightened fears of prolonged supply disruptions.

Iraq, the second-largest producer in OPEC, has cut output by nearly 1.5 million barrels per day, roughly half of its production capacity, due to storage constraints and the lack of export routes, according to officials. They warned that as much as 3 million barrels per day could be shut in within days if shipments do not resume.

Iran has also targeted oil tankers in the Strait of Hormuz, a vital waterway that handles about 20 percent of global oil and liquefied natural gas flows. Shipping traffic through the strait remains largely halted, compounding concerns over supply.

President Trump said the US Navy could begin escorting oil tankers if necessary and that he had directed the US International Development Finance Corporation to provide political risk insurance and financial guarantees to support maritime trade in the Gulf. Market reaction to the proposal was cautious. RBC analyst Helima Croft said the insurance initiative appeared to be at an early planning stage and questioned whether sufficient coordination had taken place with international tanker insurers.

Countries and companies are exploring alternatives. India and Indonesia are seeking new energy supplies, while some Chinese refineries have shut operations or brought forward maintenance schedules.

In the United States, crude inventories rose by 5.6 million barrels last week, according to industry data from the American Petroleum Institute, exceeding expectations for a 2.3 million barrel increase. Official government figures are due later Wednesday.