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EMEA Oil Update: Brent Surges as Military Strikes Outweigh Diplomatic Efforts in Middle East

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Crude futures climbed early Wednesday following fresh regional military strikes in the Middle East, while data revealed a larger-than-expected drawdown in US crude inventories.

The Brent futures contracts surged 3.7% to $87.18 per barrel. Murban closed at $84.09/bbl on July 28 and was not trading by the time of publication of this oil price update.

"Oil prices are trading higher this morning following strikes on US troops and Saudi energy infrastructure, highlighting the challenges of getting a US and Iran deal back on track," ING analysts said.

On the supply side, data from the American Petroleum Institute revealed Tuesday that US crude oil inventories decreased by 3.3 million barrels in the week ended July 24, according to a Bloomberg-compiled survey.

Attention now turns to the official petroleum inventory report from the US Energy Information Administration.

Meanwhile, OPEC+ is projected to pause further production quota increases after approving a final scheduled hike for September.

The producer group is reportedly expected to sign off on an output increase of 188,000 barrels per day when it meets virtually on August 2, continuing to evaluate regional conflict impacts.

"Obviously, supply increases on paper don't necessarily reflect an actual supply increase, given the ongoing supply disruptions in the Persian Gulf. However, post-disruption, the announced supply increases from the group reinforce the view of a well-supplied market through 2027," ING added.

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