Oil Prices Extend Four-Day Rally as U.S.-Iran Conflict and Red Sea Threats Raise Supply Fears

Oil prices climbed for a fourth consecutive session on Wednesday as traders assessed escalating military tensions between the United States and Iran, alongside growing concerns that disruptions to Middle East shipping could tighten global crude supplies.

Brent crude futures for September delivery gained 0.6% to $91.55 per barrel, while West Texas Intermediate (WTI) crude futures rose 0.4% to $84.69 per barrel as of 20:43 ET (00:43 GMT). Both benchmarks traded near their highest levels since mid-June, supported by mounting geopolitical risks across the region.

Investor sentiment remains focused on the intensifying conflict between Washington and Tehran. U.S. forces carried out strikes on Iranian military targets for an 11th consecutive night, hitting missile and drone launch sites, air defense systems, command centers, and other military infrastructure. The sustained military campaign has heightened concerns over potential disruptions to global energy markets.

Iran continued retaliatory attacks targeting U.S. military positions in Bahrain, Kuwait, and Jordan, further fueling uncertainty. At the same time, Yemen’s Iran-backed Houthi movement threatened to impose a naval blockade affecting Saudi-linked shipping routes in the Red Sea. The warning has already prompted some oil tankers to change course, increasing fears that exports from Saudi Arabia, one of the world’s largest crude producers, could face logistical challenges.

Market participants are also closely watching developments around the Strait of Hormuz, a critical shipping lane through which a significant share of the world’s oil supply passes. Continued hostilities in the area could disrupt energy flows, drive up freight and insurance costs, and place additional upward pressure on crude prices.

On the supply side, the American Petroleum Institute (API) reported that U.S. crude oil inventories increased by 2.603 million barrels last week. The surprise build contrasted with analysts’ expectations for a 1.5 million-barrel decline and marked the first inventory increase in two weeks, signaling a potentially softer domestic supply-demand balance.

Attention now shifts to the U.S. Energy Information Administration’s (EIA) official crude inventory report due later Wednesday. Traders will closely analyze the data for fresh clues on U.S. supply conditions and whether inventory trends could offset the bullish impact of escalating geopolitical tensions on global oil prices.