Key facts
- Oil prices surged nearly $3 a barrel following President Donald Trump's threat of severe U.S. action against Iran.
- A larger-than-expected drawdown of 7.2 million barrels in U.S. crude inventories also supported the price increase.
- Brent crude futures rose 2.8% to $94.06 a barrel, and WTI crude gained 3.3% to $91.12.
- The U.S. Treasury imposed new sanctions on Iranian individuals and entities.
- U.S. Strategic Petroleum Reserve inventories are at their lowest since August 2023.
Oil prices surged nearly $3 a barrel on Wednesday, with Brent crude futures rising 2.8% to $94.06 and U.S. West Texas Intermediate (WTI) crude gaining 3.3% to $91.12. The increase followed President Donald Trump's statement that the U.S. would attack Iran 'very hard' if no peace deal is finalized, alongside data showing a larger-than-expected drawdown in U.S. crude inventories.
Earlier in the week, oil prices had been volatile, fluctuating between gains and steadiness as investors weighed renewed U.S.-Iran hostilities against a forecast draw in U.S. crude stocks and lower Chinese imports. The U.S. military conducted strikes on Iranian targets, and the U.S. Treasury issued new sanctions against Iranian individuals and entities. The U.N. nuclear watchdog's Board of Governors also passed a resolution calling on Iran to declare its remaining enriched uranium stocks.
Weekly data from the U.S. Energy Information Administration revealed that U.S. crude inventories fell by 7.2 million barrels for the week ended June 5, surpassing analysts' expectations of a 4 million barrel draw. Furthermore, inventories in the U.S. Strategic Petroleum Reserve have reached their lowest point since August 2023. Analysts noted that while global crude oil stock draws are underpinning prices, lower Chinese crude oil imports and restricted shipping through the Strait of Hormuz are capping further gains.