Brent climbed almost four percent on Wednesday after strikes in Iraq and intercepted missile launches, reversing a sharp fall hours earlier.
Oil prices rose more than three dollars a barrel on Wednesday following military escalation in the Gulf region. Brent crude futures gained $3.30, or 3.9 percent, to reach $87.39 a barrel. US West Texas Intermediate rose $3.05, or 3.8 percent, to $82.31.
The move reversed a fall of about five percent the previous day, which had taken prices to a two-week low. The swing in both directions inside 24 hours reflects how closely the market is now tracking developments in the region.
Several developments landed within a short window. The US military said it intercepted ballistic missiles fired by Iran towards American forces in the Middle East, describing it as an attempted surprise attack. Iran’s Revolutionary Guards subsequently said they had launched several ballistic missiles at a US air base and a military Central Command centre in Jordan.
Saudi Arabia said its armed forces, working with US Central Command, carried out targeted strikes against Iran-backed groups in Iraq. Riyadh attributed recent drone attacks on Saudi oil facilities to those groups. Saudi forces also intercepted drones launched from Iraq towards Saudi energy infrastructure.
Analysts at ING said the strikes on weapons sites across eastern Iraq, combined with the intercepted attack on US troops, had reduced expectations of a rapid de-escalation in the Gulf.
US Crude Inventories and OPEC+ Output Add to Oil Price Pressure
Two supply factors reinforced the upward move.
US crude inventories fell by around 3.3 million barrels in the week to July 24, according to figures from the American Petroleum Institute cited by market sources. Official Energy Information Administration data was due later the same day.
Separately, OPEC+ is expected to pause its programme of output increases for three months from October, once the scheduled return of barrels held back under voluntary cuts is complete.
What Higher Oil Prices Mean for Pakistan and the Gulf
For the Gulf’s oil exporters, higher prices lift revenue. The risk sits elsewhere, in the proximity of the disruption to energy infrastructure and shipping routes, and in what sustained volatility does to insurance and freight costs.
For oil importers the arithmetic runs the other way. Pakistan has already moved from weekly to daily petroleum price revisions in response to the hostilities, meaning pump prices there now adjust as the market does rather than on a fixed schedule. Sustained increases at this level feed through to transport costs, and from there into the wider consumer price picture.
Airfares are the other pressure point for residents across the region, since jet fuel tracks crude and accounts for a substantial share of airline operating costs.
The direction from here depends on whether the escalation continues. Washington has signalled that a negotiated arrangement with Tehran remains possible, and Iran has indicated it would hold off on further strikes while a pause in US bombing holds. Neither position has yet translated into a settled outcome, which is why the market has moved five percent down and almost four percent up inside two days.
Traders will be watching the official US inventory figures and the OPEC+ decision on output for the next clear signal on supply. Everything else rests on the security situation.
