Crude Oil Prices Surge Amid Rising Tensions Following Iranian Missile Attack

Oil prices saw a significant increase on Wednesday, building on the sharp gains from the previous session following Iran’s missile attack on Israel, which heightened tensions and raised the possibility of disrupted crude production in the already unstable region.

By 04:35 ET, U.S. crude futures rose 2.1% to $71.27 a barrel, while Brent crude increased by 1.7% to $74.97 a barrel.

### Crude Prices Rise Amid Iranian Missile Attack

Both oil benchmarks had already reported gains of over 5% on Tuesday after Iran executed one of its largest military strikes against Israel. This was seen as a response to Israel’s recent killing of a Hezbollah leader backed by Iran and the country’s military activities in southern Lebanon.

Iran has stated that its actions are concluded for now, unless there is further provocation. Nonetheless, Israel has warned that its reaction will involve “vast destruction,” potentially involving the United States, which is a supporter of Israel.

Analysts from RBC Capital Markets noted that many market participants have previously downplayed the risks of physical supply disruptions stemming from the ongoing conflict, despite Iranian exports nearing six-year highs at 1.7 million barrels per day. They added that while Iran has not repeated the 2019 attacks on regional energy infrastructure, the situation could change if the current crisis escalates into a full-scale war.

Israel might also decide to adopt a more aggressive approach rather than sticking to its usual strategy of targeting military sites. Analysts at ING indicated that significant escalation could target Iranian nuclear facilities and energy infrastructure, likely leading to a higher risk premium in the oil market.

### OPEC+ Expected to Maintain Output Levels

Members of the Organization of Petroleum Exporting Countries and its allies, commonly referred to as OPEC+, will be meeting later in the day to discuss the current market conditions. The group is set to increase output by 180,000 barrels per day each month starting in December, so little change is anticipated during this meeting.

ING analysts remarked that since a number of OPEC+ members have already agreed to maintain their additional voluntary cuts through the end of November, no alterations to the current output policy are expected from this committee.

### U.S. Crude Inventories Decline, Reports Show

U.S. crude inventories fell by approximately 1.46 million barrels for the week ending September 27, according to data released by the American Petroleum Institute. This decrease is smaller than the previous week’s draw of 4.3 million barrels, with economists predicting a decline of around 2.1 million barrels.

In contrast, gasoline stockpiles increased by about 909,000 barrels, while distillate inventories, which include diesel and heating oil, saw a drop of 2.67 million barrels. An official government inventory report will be released later in the day.