Oil prices moved higher on Wednesday, gaining more than $3 as tighter U.S. refined product inventories and renewed security incidents in the Strait of Hormuz reinforced supply concerns. Brent crude settled at $101.91 per barrel, up 3.48%, while U.S. West Texas Intermediate (WTI) rose 3.67% to $92.96.
The rally was supported by U.S. inventory data showing a mixed but ultimately bullish picture. While crude stocks increased by 1.9 million barrels, both gasoline and distillate inventories posted larger-than-expected draws, signaling firm downstream demand and ongoing strain in refined product markets.
Geopolitical risks also intensified, adding to the market’s risk premium. Reports of gunfire attacks on multiple container ships in the Strait of Hormuz, along with vessel seizures by Iranian forces, underscored the continued instability in a key global energy chokepoint. The waterway, which previously handled roughly 20% of global oil and LNG flows, remains heavily restricted.
Diplomatic progress remains limited. Although the U.S. signaled an indefinite extension of the ceasefire, the move appears unilateral, with Iran indicating that a full truce is incompatible with the ongoing U.S. naval blockade. The lack of coordinated de-escalation continues to cloud the outlook for any meaningful restoration of oil flows.
Broader regional tensions persist, with renewed conflict activity in Lebanon further complicating the geopolitical backdrop and increasing the risk of spillover disruptions.
On the supply side, additional uncertainty is emerging from shifting trade flows. Russia is set to reroute some crude exports away from Europe, while temporary U.S. sanctions relief on seaborne Russian oil highlights growing concerns among import-dependent economies facing supply shortages.
Overall, oil markets remain highly sensitive to both physical supply signals and geopolitical developments. While refined product draws are offering near-term support, sustained price direction will depend on whether disruptions in the Strait of Hormuz ease and whether meaningful progress is made in U.S.-Iran negotiations.