Oil prices rose in Asian trading on Wednesday after two days of sharp gains, as an intensifying conflict between the U.S., Israel, and Iran kept supply disruption risks at the forefront of investor concerns.
As of 22:25 ET (03:25 GMT), Brent Oil Futures expiring in May rose 1% to $82.21 per barrel, while West Texas Intermediate (WTI) crude futures gained 0.7% to $75.07 per barrel.
Both benchmarks closed nearly 5% higher on Tuesday. Brent oil surged above $85 per barrel, reaching their highest level since July 2024.
Traders weigh supply risks amid widening Middle East conflict
The current crisis began over the weekend when U.S. and Israeli forces launched coordinated strikes on the Iranian military that killed Supreme Leader Ayatollah Ali Khamenei.
The situation kept deteriorating as Israeli and U.S. forces carried out additional strikes on Iranian-linked facilities on Tuesday. Iran responded by stepping up military posturing in the Gulf and issuing warnings to global shipping operators.
Tehran has also targeted oil tankers transiting the Strait of Hormuz, the narrow waterway that handles roughly a fifth of global oil shipments. Iranian authorities vowed to attack any vessel passing through the strait.
The threat to Hormuz, a critical artery for crude exports from major producers including Saudi Arabia, Iraq, and the United Arab Emirates, has injected a significant geopolitical risk premium into oil prices.
"The disruption to oil flows through the Strait is starting to affect oil flows further upstream," ING analysts said in a note.
They noted reports saying Iraq has started shutting in production at the Rumaila field, the country’s largest, and at West Qurna 2, with 1.2 million b/d going offline.
Trump to facilitate tanker traffic through the Strait of Hormuz
However, oil markets gave back part of their earlier gains in the previous session after U.S. President Donald Trump said the U.S. Navy would provide escorts for commercial vessels if necessary and pledged government support to guarantee safe passage.
"The promise of such guarantees comes as insurers are cancelling war risk coverage for vessels moving through the Strait of Hormuz," ING analysts wrote.
"This is welcome news, but clearly it won’t happen overnight," they added.
While military escalation has underpinned prices, signs of international efforts to secure shipping lanes could temper further upside in the near term.
