U.S. West Texas Intermediate crude oil prices rose by $2.90 per barrel, or 3.5%, to $86.33 in early trade on Wednesday as supplies from the Gulf remain constrained amid the U.S. and Israeli war on Iran.
Brent futures start trading at 0100 GMT. WTI rebounded after both contracts plunged by more than 11% on Tuesday, the steepest percentage drop since 2022, a day after U.S. President Donald Trump predicted a quick end to the war.
The U.S. and Israel pounded Iran on Tuesday with what the Pentagon and Iranians on the ground called the most intense airstrikes of the war.
The U.S. military also “eliminated” 16 Iranian mine-laying vessels near the Strait of Hormuz on Tuesday, the U.S. Central Command said, as Trump warned any mines laid in the Strait by Iran must be removed immediately.
Trump has repeatedly said the U.S. is prepared to escort tankers through the Strait of Hormuz when necessary. However, sources told Reuters the U.S. Navy has refused requests from the shipping industry for military escorts as the risk of attacks is too high for now.
“We continue to expect crude oil to remain highly volatile, driven by headlines while trading within a wide range between $75ish and $105ish in the sessions ahead,” Tony Sycamore, market analyst with IG in Sydney, said in a note.
On Monday, crude oil prices surged to a session high above $119 a barrel, their highest since June 2022, and G7 officials have since gathered online to discuss a potential release of emergency oil stockpiles to soften the market blow.
French President Emmanuel Macron will host a video call with other G7 country leaders on Wednesday to discuss the impact of the conflict in the Middle East on energy and measures to address the situation.
War in Iran is currently cutting Gulf oil and oil products supply to the market by some 15 million barrels per day which could raise crude prices to $150 per barrel, according to research and consultancy firm Wood Mackenzie.
Reflecting higher demand, U.S. crude, gasoline and distillate stocks fell last week, market sources said, citing American Petroleum Institute figures on Tuesday.
(Reporting by Katya Golubkova; Editing by Chris Reese)