Oil climbs as US-Iran tensions flare again while stockpiles tighten

SINGAPORE: Oil prices climbed on Wednesday, moving away from a seven-week low touched in the previous ‌session, after the U.S. military launched new strikes against Iran and as market data showed another large draw in U.S. crude stocks.

Brent futures rose 66 cents, or 0.7%, to $92.11 a barrel at 0406 GMT, while U.S. West Texas Intermediate crude climbed 60 ​cents, or 0.7%, to $88.80.

The U.S. military struck Iranian targets after President Donald Trump vowed on Tuesday ​to respond to the downing of a U.S. Apache attack helicopter, a fresh escalation ⁠that threatens to unravel a fragile ceasefire between Washington and Tehran.

The latest attacks shifted traders' focus back toward ​war risks and potential supply disruptions, said Priyanka Sachdeva, senior market analyst at Phillip Nova.

"While diplomatic efforts remain ongoing, ​the latest military exchanges have reintroduced a geopolitical risk premium into oil markets," Sachdeva said.

Tehran said it would resume hostilities if Israel continued to attack the Hezbollah militia in Lebanon. Israel's refusal to end its campaign against Iran-backed Hezbollah has hindered Trump's ​efforts to extend a tenuous ceasefire in the wider U.S.-Israeli war with Iran into a durable settlement.

"With no ​imminent deal in sight and with the global oil market tightening significantly every day, we see upside to prices, particularly if ‌these ⁠disruptions linger into the third quarter, a period of seasonally stronger oil demand," ING commodity strategists said in a note on Wednesday.

At the same time, Tehran has continued to block most shipping through the Strait of Hormuz, which normally carries a fifth of the world's crude oil and liquefied natural gas. Washington has imposed its own ​blockade of Iranian ports.

U.S. Energy ​Secretary said on ⁠Tuesday that ship traffic in the Gulf and oil exports through the Strait of Hormuz are rising even as Washington and Tehran struggle to reach a deal on ​ending their more than three-month-old war.

Meanwhile, U.S. crude oil inventories fell last week ​for an eighth ⁠consecutive week, according to market sources citing data from the American Petroleum Institute released on Tuesday, while gasoline stocks also declined.

Crude stocks fell by 9.12 million barrels in the week ended June 5, the sources said on condition of ⁠anonymity, while ​gasoline inventories fell by 1.19 million barrels.

The United States has acted ​as a marginal supplier of crude and products during the war and ramped up exports to Asia and Europe. Lower U.S. inventories could ​hurt exports and push up prices.