Oil prices increased on Wednesday due to escalating tensions in the Middle East, particularly following Iran’s launch of over 180 ballistic missiles at Israel. Brent crude futures rose by 83 cents (1.13%) to $74.39 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed 88 cents (1.26%) to $70.71. Earlier in the session, prices had spiked by more than $1.
The conflict is raising concerns about potential disruptions to oil supply from this key producing region, especially given Iran’s significant role as an OPEC member and its recent oil output reaching a six-year high of 3.7 million barrels per day in August. ANZ Research noted that Iran’s involvement in the conflict heightens the risk of supply disruptions.
Israeli Prime Minister Benjamin Netanyahu has vowed retaliation against Iran, which has threatened “vast destruction” in response. U.S. President Joe Biden expressed strong support for Israel, and the U.N. Security Council convened to discuss the situation.
The potential for U.S. involvement in the conflict adds another layer of uncertainty, as Iran accounts for about 4% of global oil output. Market analysts are closely watching whether Saudi Arabia will increase production to compensate for any disruptions.
OPEC+ is scheduled to meet to review market conditions, with no significant policy changes expected. The group plans to raise output by 180,000 barrels per day starting in December.
U.S. stockpile data revealed mixed results: crude oil and distillate inventories fell, while gasoline inventories increased, according to American Petroleum Institute figures.