Oil Advances as Strikes and Inventory Cuts Support

Key Moments

Oil Prices Extend Gains After Early Pullback

Oil prices strengthened on Thursday, erasing earlier declines, as market participants reacted to renewed U.S. military action against targets in Iran and digested data pointing to a notable fall in U.S. crude stockpiles.

At 03:05 ET (07:05 GMT), Brent Oil Futures expiring in September were up 2.6% at $93.10 per barrel, while West Texas Intermediate (WTI) crude futures advanced 1.3% to $85.57 per barrel.

The latest advance followed a powerful rally in the previous session, when Brent futures surged nearly 8% and WTI settled 6.6% higher.

Heightened Geopolitical Tensions in the Middle East

The U.S. military stated late on Wednesday that it had launched a substantial series of strikes on dozens of Islamic Revolutionary Guard Corps (IRGC) positions across Iran. The targets included military command centers, facilities tied to missiles and drones, and coastal surveillance and defense installations.

These actions came after Iran fired ballistic missiles at U.S. forces in the Middle East, a move that dashed earlier hopes for diplomatic progress. The missiles were intercepted, after which U.S. and Saudi forces conducted retaliatory attacks against Iran-backed militias in Iraq that Washington said were involved in assaults on American personnel and Saudi energy infrastructure.

U.S. President Donald Trump had told Fox News on Wednesday that Iran would be hit very hard following Tehran’s missile attack on U.S. forces in Jordan.

Conflict Spreads Across Key Energy and Shipping Routes

The unrest has widened beyond the Gulf region. Egyptian authorities reported drone attacks on two natural gas vessels operating off Egypt’s coast.

In Yemen, the Iran-aligned Houthi movement has escalated strikes on commercial vessels and Saudi-linked energy assets in and around the Red Sea and the Bab el-Mandeb Strait. The group has attempted to impose what it describes as a naval blockade on ships transiting the area, stoking renewed concerns over freight expenses and insurance costs.

The Bab el-Mandeb is described as one of the world’s most critical maritime chokepoints, connecting the Red Sea to the Gulf of Aden and handling millions of barrels of crude oil and refined products each day. These Red Sea disruptions are occurring while traffic through the Strait of Hormuz remains well below typical levels.

Inventory Data Signal Tighter U.S. Supply

Fundamental data also supported prices. The U.S. Energy Information Administration reported that domestic crude inventories fell by 7.2 million barrels last week, contrary to expectations for a 700,000-barrel increase, bringing stocks to their lowest point since 2018.

Gasoline inventories were essentially flat at 211.3 million barrels despite stronger implied demand. Distillate fuel inventories – which encompass diesel and heating oil – increased by 1.1 million barrels.

The inventory figures reinforced expectations for constrained near-term supply conditions in the United States, the world’s largest oil consumer.

Key Market Metrics