Oil prices climbed by more than $1 on Wednesday as a wave of military strikes and subsequent Iranian retaliation disrupted production and exports from the Middle East.
Brent crude rose $1.11, or 1.4%, to $82.53 a barrel, after closing at its highest level since January 2025 on Tuesday. U.S. West Texas Intermediate crude increased by 79 cents, or 1.1%, to $75.37, following a settlement at its highest level since June.
Israeli and U.S. forces carried out strikes across Iran on Tuesday, which in turn prompted Iranian attacks targeting energy infrastructure in a region that accounts for just under a third of global oil production. The strikes and counterstrikes have directly affected output and transportation routes used to move crude and liquefied natural gas.
Iraq, the second-largest crude producer in the Organization of the Petroleum Exporting Countries, has cut production by nearly 1.5 million barrels a day - roughly half of its typical output - as officials reported storage constraints and the absence of a viable export route. They warned the country may have to shut its nearly 3 million barrels per day of output within days if exports do not resume.
Separately, Iran has targeted tankers transiting the Strait of Hormuz, the strategic choke point through which about a fifth of the world’s oil and liquefied natural gas flows. Maritime traffic remained effectively closed for a fourth day after Iranian forces attacked five ships, further constraining shipments from the region.
Comments from President Donald Trump that the U.S. Navy could begin escorting oil tankers through the Strait of Hormuz if necessary helped limit the scale of crude price increases. Mr. Trump also said he had ordered the U.S. International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf.
Despite those measures, ship owners and analysts questioned whether military escorts and insurance support would be enough to restore market confidence. In response to disruption and uncertainty, countries and companies began seeking alternative routes and supplies. India and Indonesia said they were looking for other energy supplies, and some Chinese refineries were either shutting or moving up planned maintenance windows.
Saudi oil giant Aramco is attempting to reroute some exports via the Red Sea to avoid the Strait of Hormuz, sources said.
In the United States, crude inventories rose by 5.6 million barrels last week, according to market sources citing American Petroleum Institute figures - a build well above the 2.3 million barrels analysts had projected. Official U.S. government inventory figures were expected later on Wednesday.
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This sequence of events has tightened available flows from a region that supplies a large share of global energy, while prompting buyers and refiners to adjust operations and logistics amid mounting uncertainty.