Oil prices climbed about 1 percent on Wednesday as renewed tensions in the Middle East outweighed concerns over a sharp increase in US crude inventories, keeping energy markets focused on geopolitical risk.
Brent crude futures settled at 69.40 dollars per barrel, up 0.87 percent, while West Texas Intermediate crude rose nearly 1.05 percent to close at 64.63 dollars per barrel. The gains came despite data showing a significantly larger than expected build in US stockpiles.
Investor sentiment was influenced uncertainty surrounding relations between Washington and Tehran. Donald Trump said no definitive decisions had been made following talks with Israeli Prime Minister Benjamin Netanyahu, but negotiations with Iran would continue. Earlier this week, Trump indicated he was considering deploying a second US aircraft carrier to the Middle East if a deal with Iran could not be reached.
US and Iranian diplomats held indirect discussions in Oman last week, with further talks expected though no date has been confirmed. Market analysts noted that while rhetoric has occasionally intensified, there are currently no clear signs of immediate military escalation.
Geopolitical tension in the Gulf region typically supports oil prices due to concerns about potential supply disruptions. Iran remains a significant oil producer, and any deterioration in negotiations over its nuclear programme could impact exports and shipping routes.
However, price gains were capped after the US Energy Information Administration reported that crude inventories rose 8.5 million barrels last week to 428.8 million barrels. The increase far exceeded analysts’ expectations of a modest build of under one million barrels. Higher domestic production was cited as a key factor behind the surge in stockpiles.
Strong US economic data also contributed to market dynamics. The Labor Department reported that job growth accelerated unexpectedly in January, with the unemployment rate falling to 4.3 percent. Analysts say a resilient labour market supports demand for transport fuels, petrochemicals and power generation, reinforcing expectations for steady consumption.
Meanwhile, OPEC maintained its broader supply and demand outlook in its latest monthly report. The group projected that global demand for its crude would decline around 400,000 barrels per day in the second quarter compared with the first. Russian oil production edged down slightly in January, according to the same report.
Energy markets remain sensitive to a combination of geopolitical developments, macroeconomic indicators and supply data. While large US inventories could weigh on prices in the near term, uncertainty in the Middle East continues to provide underlying support.
