KEY POINTS
- Global oil prices rose by more than 2% as renewed hostilities in the Middle East heightened concerns over potential supply disruptions.
- Stalled negotiations between Iran and the United States, alongside fresh military exchanges, increased risk premiums in the oil market.
- Warnings of declining global oil inventories and falling U.S. crude stockpiles further supported the rally in crude prices.
Global oil prices extended their gains on Wednesday, rising more than two per cent as renewed conflict in the Middle East and stalled diplomatic negotiations between Iran and the United States fuelled fears of supply disruptions in the global energy market.
The surge pushed benchmark crude prices to their highest levels in more than a week, reflecting growing concerns among traders about geopolitical risks and tightening global oil supplies.
Brent crude futures gained more than two per cent to trade above $98 per barrel, while U.S. West Texas Intermediate (WTI) crude rose to nearly $96 per barrel.
Both benchmarks reached their highest levels since late May, continuing the upward momentum recorded in the previous trading session.
Market analysts attributed the rally primarily to escalating tensions in the Gulf region and increasing uncertainty surrounding future oil supplies.
Investor concerns intensified after reports emerged that Iran launched ballistic missiles toward neighbouring Gulf states, including Kuwait and Bahrain, resulting in multiple injuries.
At the same time, U.S. forces reportedly carried out military strikes on Iran’s Qeshm Island, marking another escalation in the ongoing regional conflict.
The developments have heightened fears that prolonged instability could threaten energy infrastructure and shipping routes critical to global oil exports.
U.S.-Iran Talks Show Little Progress
The oil market also reacted to signs that diplomatic efforts between Tehran and Washington have stalled.
Although U.S. President Donald Trump stated that negotiations remain ongoing, reports from Iranian sources suggested that communications between both sides have largely been suspended.
According to the reports, Iran has not responded to recent U.S. messages, with indirect negotiations reportedly paused until certain conditions relating to regional issues are addressed.
The uncertainty surrounding the talks has reduced expectations of a near-term easing of tensions, further boosting oil prices.
Energy market participants have cautioned that current oil prices may not fully reflect the risks posed by the conflict.
Executives within the global commodities trading industry noted that the market appears to be underestimating the potential impact of a prolonged confrontation involving Iran, a major player in the global energy market.
Analysts believe that any disruption to oil exports or shipping through key routes in the Gulf region could have significant consequences for global supply.
