Oil prices remained elevated on Wednesday as investors continued to weigh the chances of supply disruptions from the Iran-Israel conflict and potential direct involvement of the United States.
Brent crude gained 25 cents to close at $76.70 per barrel and the US West Texas Intermediate (WTI) crude rose by 30 cents to trade at $75.14 a barrel.
Earlier in the session, prices were down around 2 per cent, but they picked up yet again following new developments in the Iran-Israel issue.
Iranian Supreme Leader Ayatollah Ali Khamenei rejected US President Donald Trump’s demand for unconditional surrender, as Mr Trump said his patience had run out but did not indicate what his next step would be and later declined to say whether he had made any decision on joining Israel’s bombing campaign against arch-enemy Iran.
“I may do it. I may not do it. I mean, nobody knows what I’m going to do,” he said, adding that Iranian officials had reached out about negotiations, including a possible meeting at the White House but quickly noted that, “it’s very late to be talking.”
Analysts warned that direct US involvement would widen the conflict, putting energy infrastructure in the region at higher risk of attack especially one that could lead to the shutdown of the Strait of Hormuz.
ING analysts said in a note that such could lead to significant disruption enough to push prices to $120 (a barrel) since more than 30 per cent of global seaborne oil trade moves through the chokepoint.
Iran is third-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC), extracting about 3.3 million barrels per day of crude oil.
The US Federal Reserve held interest rates steady on Wednesday and policymakers signaled borrowing costs are still likely to fall this year. Lower interest rates generally boost economic growth and demand for oil.
However, there are worries about higher inflation flowing from the President Trump administration’s tariff plans.
In US supply, crude stocks fell by 11.5 million barrels to 420.9 million barrels last week, the Energy Information Administration (EIA) said on Wednesday. By contrast, the American Petroleum Institute (API) on Tuesday had estimated a 10.133-million-barrel drop for the week ending June 13.