Global oil prices continued their rise during trading on Wednesday, supported by escalating geopolitical tensions in the Middle East, following the US downing of an Iranian drone and the approach of armed Iranian boats to an American-flagged oil tanker in the Strait of Hormuz, which brought back to the forefront fears of disruption to global supplies.
Brent crude futures rose 0.8% to $67.87 a barrel, while U.S. West Texas Intermediate crude climbed 0.9% to $63.84 a barrel, after both crudes posted strong gains of nearly 2% during Tuesday's session.
The US military reported that an Iranian drone approached the aircraft carrier Abraham Lincoln in the Arabian Sea in what it described as an "aggressive" manner before being shot down, while naval sources revealed movements of Iranian warships near an American oil tanker in the Strait of Hormuz.
In the same context, Iran demanded that any potential talks with the United States be held in Oman instead of Turkey, and limited to the nuclear issue only, which increased the state of anticipation in the markets.
Analysts said these developments have reinforced the geopolitical risk premium in the oil market, especially given the strategic importance of the Strait of Hormuz, through which huge oil exports from OPEC countries, including Saudi Arabia, the UAE, Kuwait, Iraq and Iran, pass, particularly towards Asian markets.
Oil prices also received additional support from unofficial data showing a sharp drop in US crude oil inventories of more than 11 million barrels last week, according to figures from the American Petroleum Institute, pending the release of official data later today.
The gains were also driven by a new trade agreement between the United States and India that boosted expectations of global energy demand growth, along with continuing geopolitical tensions related to the Russian-Ukrainian war and its impact on Russian oil supplies.
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