Oil prices moved higher again on Wednesday after fresh tensions flared between the United States and Iran. The jump came after the U.S. military shot down an Iranian drone and Iranian armed boats moved close to a U.S.-flagged ship in the Strait of Hormuz, raising fears that the situation could escalate.
Brent crude rose by 56 cents, or about 0.8%, to $67.89 a barrel. U.S. West Texas Intermediate crude climbed 63 cents, or 1%, to $63.84 a barrel. Both oil benchmarks had already gained nearly 2% on Tuesday as traders kept a close eye on U.S.-Iran developments.
Analysts say uncertainty is driving prices higher. ING commodity strategists said markets are likely adding a risk premium because no one knows how talks between Washington and Tehran will unfold.
According to the U.S. military, an Iranian drone was shot down on Tuesday after it flew aggressively toward the USS Abraham Lincoln aircraft carrier in the Arabian Sea. In a separate incident, Iranian gunboats approached a U.S.-flagged oil tanker in the Strait of Hormuz, just north of Oman, according to maritime and security sources.
At the same time, Iran is demanding changes to planned talks with the United States. Tehran wants the meeting to take place in Oman instead of Turkey and insists the discussions focus only on nuclear issues. These demands have raised doubts about whether the talks will even happen.
Market analysts say rising tensions in the Middle East are giving oil prices a boost. The Strait of Hormuz is especially critical, as major oil producers like Saudi Arabia, Iran, the UAE, Kuwait, and Iraq ship most of their crude through this narrow waterway, mainly to Asian markets. Iran was the third-largest oil producer in OPEC in 2025.
Oil prices also got support from reports showing a sharp drop in U.S. crude stockpiles. Industry data suggests inventories fell by more than 11 million barrels last week. This surprised many traders, since analysts had expected stockpiles to rise. Official U.S. government data is expected later on Wednesday.
Other global factors are also helping push prices higher. A new trade agreement between the U.S. and India has raised hopes for stronger energy demand. At the same time, continued Russian attacks on Ukraine are keeping concerns alive that Russian oil supplies will remain under sanctions for longer.
Analysts say these combined pressures could keep oil prices supported in the near term, with U.S. crude likely hovering around the $65-a-barrel range for now.
