Oil prices rose early on Wednesday on renewed fighting between the United States and Iran, while a report showed U.S. oil inventories fell for an eighth week.
West Texas Intermediate crude oil for July delivery was last seen up US$1.68 to US$89.88 per barrel, while August Brent oil was up US$1.52 to US$92.97.
The rise comes on a fresh clash between the United States and Iran. Iran on Tuesday shot down a U.S. helicopter and the U.S. responded with attacks on Iranian targets. According to the Wall Street Journal, Iran also attacked U.S. allies in the Persian Gulf region, as well as Jordan.
The fighting is lowering hopes for a peace deal between Iran and the United States, leaving the Strait of Hormuz closed to shipping and keeping most oil exports from Persian Gulf nations, which supplied a fifth of daily oil demand, off the market.
In its monthly Short-Term Energy Outlook released on Tuesday, the Energy Information Administration (EIA) reported the closure of the Strait is depleting global inventories, keeping prices high.
"Global oil markets remain highly volatile as very limited shipping traffic through the Strait of Hormuz has caused oil producers in the Middle East to reduce crude oil production by more than 11 million barrels per day (b/d) in May compared with pre-conflict levels. This drop in production has resulted in large global inventory draws to meet demand. Under our assumptions, we expect global oil inventories will fall by an average of 6.3 million b/d in 2Q26 and by 7.6 million b/d in 3Q26," the agency said.
In its weekly survey, the American Petroleum Institute reported U.S. oil inventories fell by 9.12-million barrels last week, well above consensus expectation for a drop of 3.4-million barrels and the eighth-straight weekly drop. The EIA will release official storage data later on Wednesday morning.