Oil Prices Surge as US Crude Inventories Fall Amid Ongoing Middle East Tensions
Oil prices surged by more than $2 a barrel in early trade on Wednesday after it emerged that US crude inventories had shrunk significantly. The rebound, which came as a relief to oil investors, saw Brent futures rise by $2.71, or 3.2%, to $86.80 a barrel at 0002 GMT, while US West Texas Intermediate (WTI) crude rose $2.26, or 3.4%, to $81.95.
The decline in US crude inventories, which fell by about 3.3 million barrels in the week ended July 24, according to market sources, provided a boost to oil prices. This move was also supported by the prospect of OPEC+ halting oil output increases for three months starting in October.
However, the oil price gains were tempered by ongoing tensions between the US and Iran, which have disrupted global flows of crude oil. The effective closure of the Strait of Hormuz has led to concerns about potential supply disruptions, causing prices to plummet by about 5% on Tuesday to a two-week low.
US President Donald Trump's comments that there were 'good talks' with Iran, but threatened more strikes if negotiations break down, added to the volatility in oil markets. Meanwhile, Oman has presented Iran with a plan to manage the strait, which would include collecting voluntary fees for using the passageway.