Oil prices surged more than 3% on Wednesday, reaching their highest levels since mid-June as escalating conflict in the Middle East intensified concerns over global crude supplies and shipping security. Brent crude rose 3.36% to settle at $94.07 per barrel, while West Texas Intermediate (WTI) gained 2.95% to finish at $86.83 per barrel.
Market sentiment remained driven by mounting geopolitical risks as military exchanges between the United States and Iran continued to escalate. Investors also grew increasingly concerned about threats to commercial shipping through both the Strait of Hormuz and the Bab el-Mandeb Strait, two critical chokepoints for global energy exports. The potential for simultaneous disruptions along both routes has significantly increased the geopolitical risk premium embedded in crude oil prices.
Shipping companies have begun rerouting vessels to avoid areas facing elevated security risks, while refiners are seeking alternative export routes to maintain crude supplies. These logistical challenges have reinforced expectations of tighter near-term oil availability, with prompt crude prices continuing to trade at a premium over future deliveries—a market structure that typically signals immediate supply concerns.
Limiting additional gains, U.S. crude inventories increased by 2 million barrels during the week as refinery activity slowed, crude exports declined, and imports increased. However, the inventory build did little to offset concerns that continued instability across the Middle East could further disrupt global energy flows and keep upward pressure on crude prices.