Oil rises as US-Iran tension escalates after Iraq strikes, missile attack
XLE•Analysts say de-escalation expectations fade
"Renewed strength comes after the U.S. said it intercepted a surprise attack on U.S. troops," ING analysts said in a note.
"Saudi Arabia intercepted drones from Iranian-backed groups in Iraq, which were targeting Saudi energy infrastructure," they said, adding that U.S. and Saudi forces launched strikes on weapon sites across eastern Iraq.
The latest developments dampen expectations for a swift de-escalation in the Persian Gulf, they said.
Inventory draw and OPEC+ outlook support prices
U.S. crude inventories fell by about 3.3 million barrels in the week ended July 24, market sources said on Tuesday, citing data from the American Petroleum Institute.
Official inventory data from the Energy Information Administration is due later on Wednesday.
Further supporting prices, OPEC+ is likely to halt oil output increases for three months starting in October, sources told Reuters, after the producer group completes the scheduled return of barrels following voluntary cuts.
Oil prices jump on escalating Middle East tensions
Oil prices rose more than $3 a barrel on Wednesday after joint strikes in Iraq by the United States and Saudi Arabia, and the interception of Iran's ballistic missiles aimed at U.S. forces in the Middle East, while U.S. crude inventories shrank.
Brent futures LCOc1 increased by $3.30, or 3.9%, to $87.39 a barrel by 0300 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 rose $3.05, or 3.8%, to $82.31 a barrel.
