West Texas Intermediate (WTI) crude oil surged to its highest level in nearly two weeks on Wednesday, trading around $94 per barrel and marking gains for a third consecutive day. This rally was driven by renewed hostilities in the Middle East, specifically Iran's missile and drone attacks on Kuwait and Bahrain, and subsequent US 'self-defense' strikes on Iran’s Qeshm Island. These developments have heightened geopolitical risks and dampened hopes for a near-term US-Iran deal that could reopen the Strait of Hormuz, a critical chokepoint for global oil trade handling approximately 20% of worldwide oil shipments [1].
Negotiations between the US and Iran are ongoing, with Tehran reportedly outlining a four-stage proposal for a deal. However, control of the Strait of Hormuz remains a major sticking point, as Iran views it as a matter of national sovereignty. The uncertainty surrounding these talks continues to support elevated crude prices. Additionally, the Financial Times reported that the UAE is planning to construct its first multi-fuel pipeline from Abu Dhabi to Fujairah, which would allow gasoline, diesel, and jet fuel to bypass the Strait of Hormuz, potentially reducing future geopolitical risks for oil transit in the region [1].
On the supply side, the US Energy Information Administration (EIA) reported a significant drawdown in US crude oil inventories, with stocks falling by 7.97 million barrels last week. This was nearly double the expected decline of 4 million barrels and represents the largest weekly drop since February. The sharp inventory reduction has further contributed to the bullish momentum in WTI prices [1].
CONCLUSION
WTI crude oil prices have climbed sharply due to escalating US-Iran tensions and a substantial US inventory draw, reinforcing market concerns over supply disruptions. The ongoing negotiations and strategic infrastructure developments in the region will remain key factors influencing oil prices in the near term.