Oil prices climbed on Wednesday as doubts over a U.S.–Iran peace deal and attacks on two ships stoked concerns about Middle East supply disruptions, even as industry data pointed to bulging U.S. crude inventories, according to Reuters. Brent futures gained 75 cents, or 0.84%, to $89.66 a barrel by 0553 GMT, while U.S. West Texas Intermediate (WTI) crude rose 72 cents, or 0.87%, to $83.92.
Price action and market swings
Both contracts had risen more than $1 earlier in the session, following Tuesday's advances of more than $1 that produced the highest closes for both benchmarks since July 31, Reuters reported. Prices had already jumped about 5% on Monday as hopes faded for a U.S.–Iran peace deal after President Donald Trump issued a new demand that Iran offer compensation for those killed in wars, attacks and protests.
"The Middle East is increasingly becoming a seesaw between 'deal' and 'war', keeping oil prices swinging like a pendulum between $70 and $90 a barrel," said Priyanka Sachdeva, head of market insights for Phillip Nova in Singapore.
Sachdeva also said markets may be entering an environment where they simply adapt to this "weekly flip in narrative", creating "a highly volatile but opportunity-rich landscape for intraday traders, scalpers and short-term speculators", Reuters reported.
Geopolitical triggers: Hormuz and Bab el-Mandeb
The United States and Yemen's Iran-aligned Houthis reported separate attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday, according to Reuters. Iran's top security official, Mohsen Rezaei, said the Strait of Hormuz would stay closed unless the U.S. accepted Iran's conditions to end the war, including release of its frozen assets and an end to other regional conflicts.
In a Tuesday interview, Trump said the United States may let Iran "bop along" or "hit them really, really hard", Reuters reported, noting he has alternated between escalation threats and claims that a peace deal is imminent.
Shipping data showed vessels transiting the Strait of Hormuz fell to a one-week low of eight on Tuesday, down from 125 to 140 vessels per day before the war, Reuters reported.
| Strait of Hormuz transit activity | Vessels per day |
|---|---|
| Pre-war daily average | 125–140 |
| Tuesday (one-week low) | 8 |
U.S. inventories: API build vs. expected draw
On the supply side, a Reuters poll on Tuesday showed U.S. crude and fuel inventories were expected to have fallen last week. However, market sources citing American Petroleum Institute (API) data said U.S. crude inventories rose sharply in the week ended August 7, while gasoline and distillate stocks fell, Reuters reported.
Crude stocks rose by about 9.1 million barrels, while gasoline inventories fell by 1.5 million barrels and distillate stocks fell by 596,000 barrels from the previous week, according to the API-sourced data.
| API inventory change (week ended Aug 7) | Change (barrels) |
|---|---|
| Crude | +9.1 million |
| Gasoline | -1.5 million |
| Distillates | -596,000 |
The crude build far exceeded expectations and, if confirmed by the Energy Information Administration (EIA) report due at 10:30 a.m. ET (1430 GMT) on Wednesday, could ease market concerns about supply tightness, Haitong Futures said in a note cited by Reuters. The EIA is the statistical arm of the U.S. Department of Energy.
Longer-term supply outlook
For longer-term supply, the EIA expected disruptions of about 600,000 barrels per day to Middle East crude oil supplies to persist through the end of 2027, Reuters reported. That projection frames the demand-supply calculus for traders watching whether the latest geopolitical flashpoints translate into sustained production losses.
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