Oil prices moved modestly higher on Wednesday, supported by another draw in U.S. crude inventories, while traders largely looked past renewed military action between the United States and Iran. Brent crude settled at $84.95 per barrel, up 0.26%, while West Texas Intermediate (WTI) finished at $79.60 per barrel, up 0.33%.
U.S. crude inventories declined by 1.7 million barrels during the week, indicating continued demand for crude, although the draw was smaller than market expectations. At the same time, distillate inventories posted a sizeable increase, suggesting refined fuel supplies remain adequate despite elevated refining activity.
Geopolitical tensions remained elevated after the United States conducted additional strikes targeting Iranian military assets associated with attacks on commercial shipping. Iran responded with strikes against U.S. military positions in the region and renewed threats against key energy shipping routes. Despite the escalation, the oil market reacted cautiously, reflecting growing expectations that supply disruptions may remain limited.
Shipping through the Strait of Hormuz continues to be the primary focus for energy markets. Although exports from the Persian Gulf had partially recovered following the June ceasefire agreement, recent military activity has slowed that recovery. Analysts estimate Gulf crude exports have fallen back below pre-conflict levels, maintaining a geopolitical risk premium in crude prices.
While continued uncertainty surrounding Middle East energy infrastructure remains supportive for oil prices, investors have become increasingly hesitant to aggressively price in worst-case supply disruption scenarios unless shipping flows experience a sustained deterioration.