Oil futures rebounded sharply on Wednesday as fresh hostilities in the Middle East and a reported fall in U.S. crude stockpiles combined to reverse a recent three-day decline.
By 20:47 ET (00:47 GMT), Brent futures had risen 4.2% to $87.62 a barrel, while West Texas Intermediate (WTI) crude was up 4.1% at $82.49 a barrel. The move followed a roughly 15% drop in both benchmarks over the previous three sessions.
Middle East tensions re-escalate
Markets homed in on developments after Iran launched a second wave of ballistic missiles targeting U.S. forces in the Middle East. U.S. Central Command reported all of the missiles were intercepted. The attack represented a renewed escalation following several days of relative calm, reviving investor concern that the diplomatic pause in hostilities may not hold and that regional oil supplies could be disrupted.
The uptick in risk came even as there had been growing market optimism about diplomatic engagement after Israeli Prime Minister Benjamin Netanyahu met with U.S. President Donald Trump in Washington. President Trump said there was a good chance talks with Iran would make progress, while Tehran denied seeking negotiations or a ceasefire.
Supply-side signals: inventories and OPEC+
Sentiment was further supported by an industry report from the American Petroleum Institute that estimated U.S. crude inventories fell by about 3.3 million barrels last week. The API estimate pointed to resilient demand ahead of official government inventory data scheduled later in the day.
Price strength also reflected media reports that OPEC+ is weighing a pause in further production increases for three months starting in October, once planned voluntary output cuts have been fully reversed. The possibility of a temporary halt to the scheduled uptick in supply helped underpin the market after the recent pullback.
Shipping and infrastructure concerns
ANZ analysts noted that efforts to reopen the Strait of Hormuz have stalled after Iran rejected an Omani proposal for a shared framework to manage shipping through the waterway. Tanker traffic through Hormuz remained subdued according to the bank, and threats to regional energy infrastructure persisted after Saudi Arabia reported intercepting drones and missiles targeting oil facilities in its Eastern Province.
These developments added to the market’s sensitivity to any escalation that could affect crude exports, shipping routes and energy installations in the region.
Context on the recent selloff
The rebound followed a sharp three-day selloff in which WTI fell about 15% from an intraday peak near $93.50 on Friday. Traders had been unwinding bullish positions as hopes grew that diplomatic efforts might ease tensions between Washington and Tehran, prompting a rapid correction in prices.
With both geopolitical risks and supply-side considerations contributing to market moves, traders continued to weigh incoming data and diplomatic signals closely as they reassess risk premiums in crude prices.