Oil prices jumped more than a dollar on Wednesday amid growing concerns that Middle East tensions could escalate and crude production in the region could be disrupted after Iran struck its biggest-ever military blow against Israel.
Iran fired more than 180 missiles at Israel. Israel and the US vowed retaliation against Tehran.
Brent futures rose $1.08, or 1.47%, to $74.64 a barrel, while WTI crude rose $1.12, or 1.6%, to $70.95 a barrel by 06:50 GMT.
In Tuesday’s trading, both indexes were up more than 5%.
Oil markets have largely focused on the narrative that a weakening global economic outlook has reduced fuel demand. But recent developments have quickly turned the needle on fears of disruptions to oil supplies in the Middle East after Iran fired ballistic missiles at Israel.
Iran said early Wednesday that its missile strikes on Israel had ended in case not to have further provocations, while Israel and the United States vowed to retaliate against Tehran.
Tehran said any Israeli response to the attack, which Israel said involved more than 180 ballistic missiles, would be met with “tremendous destruction.”
The United Nations Security Council has scheduled a meeting on the Middle East for Wednesday, and the European Union has called for an immediate ceasefire.
Iran’s oil production reached a six-year peak of 3.7 million barrels per day in August. The direct involvement of OPEC member Iran in the conflict raises the possibility of oil supply disruptions,
Iran accounts for about 4% of global oil production, but a key issue will be whether Saudi Arabia will increase output if Iranian supplies are disrupted.
OPEC+ meets later on Wednesday to review the market, but no change in policy is expected. OPEC+, including Russia, is set to increase monthly output by 180,000 barrels per day (bpd) from December.
Any suggestion that output increases will continue could offset concerns about supply disruptions in the Middle East. According to API data, U.S. inventory data is mixed: crude and distillate inventories fell last week, while gasoline inventories rose.
Oil investors will also be closely watching U.S. jobless claims data on Friday, as this is expected to weigh on projections for the Fed’s monetary easing, which is likely to boost overall economic activity and help long-term oil demand.
