Oil prices climbed more than 1% in early trade on Wednesday as hostilities in the Middle East erupted anew with Iran firing missiles at Kuwait and Bahrain, while diplomatic talks between Iran and the United States showed little progress.
Brent futures rose $1.05, or 1.09%, at $97.05 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.01, or 1.08%, to settle at $94.77.
Both benchmarks settled at a one-week high in the previous session.
Iran launched ballistic missiles toward regional neighbors Kuwait and Bahrain but failed to hit targets, the U.S. military said, adding that U.S. forces conducted strikes on Iran’s Qeshm Island in response to attempted attacks. The market awaited news on the Iran war, with Tehran reviewing a proposed agreement with the U.S. to halt the conflict. Iran has not communicated with Washington for a few days, Iranian media reported on Tuesday, though Trump said negotiations had been going on continuously.
ANZ bank senior commodity strategist Daniel Hynes said any efforts to reopen the Strait of Hormuz face challenges as Iran has mined large portions of the vital waterway.
“There has been a slight tick up in vessels attempting the journey, but total transits remain significantly below pre-conflict levels,” Hynes said. More than three months after the U.S. and Israel launched strikes against Iran, the conflict is stuck in a stalemate, with a shaky ceasefire in.
On the supply side, U.S. crude oil inventories fell for a seventh straight week last week, according to market sources citing American Petroleum Institute data released on Tuesday.
Crude stocks fell by 6.8 million barrels in the week ended May 29, the sources said.
U.S. government data on stockpiles is due at 10:30 a.m. ET (1430 GMT) on Wednesday.
(Reporting by Nicole Jao in New York; Editing by Cynthia Osterman)