The U.S. crude oil benchmark rallied nearly 2.5% on Wednesday, with Brent crude not far behind, as Wall Street held its breath over an anticipated response by Iran to Israel's assassination of the Hamas leader on Iranian territory.
On Wednesday at 1:09 p.m. ET, WTI was trading up 2.53% (compared to gains of nearly 3.5% just an hour earlier), at $75.05. Brent crude was trading up 2.28% at $78.22, still failing to breach the $80 mark.
News reports of Israel stockpiling blood supplies and shoring up their underground bunkers in preparation for an attack by Iran have sent markets into a panic, though such preparations have been underway since the October 7 attack on Israel by Hamas.
Concerns of potential supply disruptions have continued to gain momentum, with military escalations heightening fears that the wider Middle East could become embroiled in the conflict, rendering energy infrastructure a clear target.
Tensions hit new heights on Wednesday, with Iranian army commander Abdolrahim Mousavi cited by Iranian news agencies as saying, "We believe that this child-killing Israeli regime is nearing its end. History shows that anyone who rules with oppression will not remain in power and will be annihilated ASAP."
The commander vowed a "strong and definite response" to Israel on Wednesday, and also praised Hamas decision to replace its assassinated leader with Yahya Sinwar as the new political head of the group.
Tensions in the Middle East this week have overshadowed more optimistic inventory reports as the key driver of prices, but this week's EIA stockpile report played a role, as well, showing another inventory decline for the week ended August 2nd. A day earlier, the American Petroleum Institute (API) had estimated a build in U.S. crude oil inventory in a surprise blow to markets that temporarily pressured prices downward until the official EIA report on Wednesday.
By Charles Kennedy for Oilprice.com
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