Key Takeaways

• Oil extends rally: Brent rose 1.1% to $97.01 per barrel, while WTI gained 1.1% to $94.76 — both extending the prior session’s 1%+ advances.
• Qeshm Island struck: U.S. Central Command confirmed strikes on Iran’s Qeshm Island — located near the Strait of Hormuz — significantly raising the strategic stakes.
• Iran talks stall: Communication between Washington and Tehran has stalled despite Trump’s insistence that negotiations are continuing.
• Iranian media skeptical: Local reports cast doubt on any near-term agreement, pushing traders to price in a higher geopolitical risk premium.
• Kuwait intercepts attacks: Kuwaiti air defenses shot down hostile missile and drone attacks.
• Israel continues Lebanon operations: Military activities in southern Lebanon persisted; new talks involving Israel and Lebanon scheduled for Wednesday.
• API inventory shock: U.S. crude inventories fell 6.8 million barrels last week — nearly double the 3.6 million expected.
• EIA data ahead: Official inventory figures from the Energy Information Administration are due later Wednesday.
• Hormuz the critical flashpoint: The strait carries roughly a fifth of the world’s oil — any escalation near Qeshm Island directly threatens the chokepoint.

Oil prices extended gains during Asian trading on Wednesday amid renewed hostilities in the Middle East and stalled negotiations between the United States and Iran, while industry data showing a sharp decline in U.S. crude inventories added to the bullish tone.

As of 20:23 ET (00:23 GMT), Brent oil futures expiring in August rose 1.1% to $97.01 per barrel, while West Texas Intermediate (WTI) crude futures also gained 1.1% to $94.76 per barrel.

Both contracts had advanced more than 1% in the previous session.

Strikes Near Hormuz Ratchet Up Tensions

Investor focus remained firmly on the Middle East after hopes for a breakthrough in U.S.-Iran talks faded.

Israel continued military operations in southern Lebanon, while Kuwait said its air defenses intercepted hostile missile and drone attacks.

Additionally, U.S. forces conducted strikes on Iran’s Qeshm Island, U.S. Central Command said in a post on X. The island lies near the Strait of Hormuz — a vital waterway through which roughly a fifth of the world’s oil consumption passes.

Reports suggested that communication between Washington and Tehran had stalled in recent days, despite U.S. President Donald Trump maintaining that negotiations were continuing.

Iranian media cast doubt on the prospects for a near-term agreement, prompting traders to price in a higher geopolitical risk premium.

Another round of talks involving Israel and Lebanon is scheduled for Wednesday.

API Inventory Shock Adds Tailwind

Supporting prices further, data from the American Petroleum Institute showed U.S. crude inventories fell by 6.8 million barrels in the week ended May 29 — significantly exceeding expectations for a draw of 3.6 million barrels.

Market participants are now awaiting official inventory figures from the U.S. Energy Information Administration, due later on Wednesday.