Oil prices steady as markets assess renewed US-Iran confrontation

Oil prices were little changed on Wednesday as investors evaluated the implications of renewed tensions between the United States and Iran, balancing weaker Chinese demand against continued drawdowns in global inventories.

In trading, Brent crude futures slipped 25 cents, or 0.23%, to $91.24 per barrel by 10:08 GMT, while US West Texas Intermediate crude fell 14 cents, or 0.16%, to $88.06 per barrel.

Prices had risen earlier in the session following the latest exchange of strikes between Washington and Tehran before retreating back toward previous closing levels.

Tamas Varga, analyst at PVM, said ongoing declines in global inventories continue to support prices, but weaker Chinese crude imports are limiting further upside, alongside continued restrictions on shipping activity through the Strait of Hormuz.

Varga added that it remains difficult to reconcile the current relative calm in oil markets with an ongoing conflict in one of the world’s most important energy-producing regions.

Geopolitical tensions restore the risk premium

US forces launched strikes against Iranian targets after President Donald Trump vowed on Tuesday to retaliate for the downing of a US Apache attack helicopter.

Priyanka Sachdeva, Senior Market Analyst at Phillip Nova, said the latest attacks have refocused traders on war-related risks and the potential for supply disruptions.

She added that the recent military exchanges have reintroduced a geopolitical risk premium into oil markets despite continuing diplomatic efforts.

Meanwhile, Tehran warned that it would resume hostilities if Israel continues its operations against the Iran-backed Hezbollah militia in Lebanon.

Israel’s refusal to end its campaign against Hezbollah has further complicated Trump’s efforts to transform the fragile ceasefire in the broader conflict involving the United States, Israel, and Iran into a lasting settlement.

Iran continues to disrupt much of the shipping traffic through the Strait of Hormuz, which normally carries around one-fifth of the world’s crude oil and liquefied natural gas supplies, while Washington maintains a blockade on Iranian ports.

US Energy Secretary said on Tuesday that vessel traffic in the Gulf and oil exports through the Strait are increasing, despite stalled negotiations between Washington and Tehran aimed at ending the conflict that has lasted for more than three months.

In the United States, data from the American Petroleum Institute, according to market sources, showed that US crude inventories declined for an eighth consecutive week last week. Gasoline inventories also fell, providing additional support for oil prices.