Oil Prices Jump Nearly 4% After Middle East Strikes and Falling US Crude Inventories

Oil prices climbed sharply on Wednesday after the United States and Saudi Arabia carried out joint strikes against Iran-backed groups in Iraq and the US military said it intercepted ballistic missiles launched by Iran toward American forces in the Middle East. The gains were also supported by a decline in US crude oil inventories.

Brent crude futures rose $3.15, or 3.8 percent, to $87.24 a barrel by 08:20 a.m. Saudi time. US West Texas Intermediate crude gained $2.73, or 3.4 percent, to trade at $81.99 a barrel.

Market analysts said the latest military developments reduced hopes that tensions in the Gulf would ease quickly.

Analysts at ING said the renewed strength in oil prices followed the US announcement that it had intercepted what it described as a surprise attack on American troops in the region. They noted that the developments had weakened expectations for a rapid reduction in regional tensions.

The military action came after the United States and Saudi Arabia launched strikes against Iran-backed groups in Iraq, accusing them of carrying out drone attacks on Saudi oil facilities. Iran rejected the accusations and warned that holding Tehran responsible for the attacks would be a “major miscalculation.”

The strikes followed an earlier announcement by the US military that it had prevented a surprise Iranian missile attack targeting American forces stationed in the Middle East.

Concerns over shipping through the Strait of Hormuz also continued to support oil prices. Only five commodity vessels passed through the strategic waterway on Tuesday, highlighting the ongoing disruption to tanker traffic.

The Strait of Hormuz is one of the world’s most important energy routes, carrying around one-fifth of global crude oil and natural gas shipments before the current conflict intensified. Continued uncertainty over the passage has raised fears of supply disruptions in international energy markets.

Diplomatic efforts to address the situation have faced setbacks. According to Reuters, Oman presented Iran with a Gulf-backed proposal to establish a regional system for managing the Strait of Hormuz, including voluntary transit fees. However, a senior Iranian official said Tehran had rejected the proposal, reducing prospects for an agreement.

Suvro Sarkar, head of energy research at DBS Bank, said oil prices were likely to remain volatile in the near term, with Brent expected to trade between $80 and $100 a barrel as the conflict continues to shift between periods of escalation and diplomacy.

He said recent signals from US President Donald Trump supporting renewed diplomatic efforts had not eliminated concerns over the security of the Strait of Hormuz. Sarkar added that even if tensions ease, prices are likely to find support around the $80 per barrel level because uncertainty surrounding the shipping route remains unresolved.

Additional support came from supply data in the United States. Market sources, citing figures from the American Petroleum Institute, said US crude inventories fell by about 3.3 million barrels during the week ending July 24. Investors are awaiting official inventory data from the Energy Information Administration later on Wednesday.

Traders are also watching OPEC+, with sources indicating the producer group is expected to pause planned oil output increases for three months beginning in October after completing the scheduled return of production previously cut on a voluntary basis.