BY COMFORT OGBONNA
Oil prices remained largely steady on Wednesday following heightened tensions in the Middle East, after the U.S. shot down an Iranian drone and a group of armed Iranian boats approached a U.S.-flagged vessel in the Strait of Hormuz. The developments revived concerns over a possible escalation between Washington and Tehran and the potential impact on global oil flows.
By 0931 GMT, Brent crude futures were up 7 cents, or 0.1%, at $67.40 a barrel, while U.S. West Texas Intermediate crude rose 14 cents, or 0.2%, to $63.35. Both benchmarks had climbed nearly 2% on Tuesday, reflecting market fears that the incidents could disrupt shipping through the strategic Strait of Hormuz or affect Iran’s oil production. Analysts noted that prices would likely be lower without the current geopolitical tensions.
The U.S. military confirmed that it had shot down an Iranian drone that approached a U.S. aircraft carrier in the Arabian Sea in an aggressive manner. In a separate incident, several Iranian gunboats came near a U.S.-flagged tanker north of Oman, according to maritime sources and a security consultancy. The Strait of Hormuz is a critical shipping route for crude exports from major OPEC producers, including Saudi Arabia, Iran, the United Arab Emirates, Kuwait, and Iraq, most of which head to Asian markets.
Oil prices were further supported by data from the American Petroleum Institute showing a sharp decline in U.S. crude stockpiles. Inventories fell by more than 11 million barrels last week, highlighting tighter supply conditions in the world’s largest oil producer and consumer. Market participants are now awaiting official figures from the U.S. Energy Information Administration, scheduled for release at 1530 GMT. Analysts had been expecting an increase in crude inventories, making the reported drop particularly notable.
In addition to supply concerns, oil markets were buoyed by the announcement of a U.S.-India trade agreement, which raised expectations of stronger global energy demand. Meanwhile, ongoing Russian attacks in Ukraine continued to create uncertainty over Russian oil supplies, reinforcing fears that Moscow’s crude could remain constrained under sanctions for the foreseeable future.
Overall, the combination of geopolitical tensions, tighter U.S. supplies, and hopes for increased global demand kept oil prices supported, even as some earlier gains were erased in early Wednesday trading. The market remains sensitive to both regional instability in the Middle East and developments in global energy trade and supply.
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