Oil Prices Rise 2% as Middle East Hostilities Escalate

Oil prices ‌rose around 2 per cent on Wednesday as hostilities in the Middle East erupted anew and talks between Iran and the United States showed little progress.

Brent futures grew by $1.81 or 1.89 per cent to $97.81 per barrel, and the US West Texas Intermediate (WTI) crude climbed $2.26 or 2.41 per cent to $96.02 a barrel.

According to reports, Iran launched ballistic missiles toward regional neighbours Kuwait and ​Bahrain, killing one person and injuring dozens, while the US forces conducted strikes on Iran’s Qeshm ​Island.

Iranian drones and missiles struck Kuwait International Airport overnight, causing the country to immediately suspend air traffic, activate emergency procedures, and divert flights to alternative airports.

Iran’s Revolutionary Guard said the operation was retaliation for recent US military actions and warned that regional states supporting American operations could face further consequences. Kuwait hosts major US military facilities and serves as a key logistics hub for American operations across the Middle East, but until then had largely avoided becoming a direct target.

Following the overnight attack, the United Arab Emirates (UAE) called for a united Gulf stance.

Meanwhile, President Donald Trump said Iran had agreed not to have a nuclear weapon and that Supreme Leader ‌Ayatollah Mojtaba ⁠Khamenei was involved in negotiations. He has insisted this week that discussions remain active and said a broader agreement could emerge within days, while Iranian officials have delivered contradictory messages.

Iranian Foreign Minister Abbas Araqchi said contacts with American representatives have not been cut off, but no progress has been made in the negotiations.

The prolonged closure of the Strait of Hormuz continues to bottleneck global energy supplies, driving sustained upward pressure on oil markets.

The International Energy Agency (IEA) has warned that global ​oil inventories could hit critical ​levels ahead of peak summer ⁠demand if stock draws continue at their current pace.

Crude oil inventories in the US decreased by 8.0 million barrels during the week ending May 29, according to data from the Energy Information Administration (EIA) released on Wednesday. The EIA’s data release follows figures by the American Petroleum Institute (API) that were released a day earlier, which reported that crude oil inventories saw a draw of 6.75 million barrels in the period.