Middle East conflict reignites supply concerns, international oil prices end three-day losing streak with a 5% surge in one day

According to Zhihu Finance APP, after experiencing significant declines for three consecutive trading days, international crude oil prices saw a strong rebound this Tuesday. The main reason was the outbreak of new armed conflicts in the Middle East, escalating threats to energy transportation routes and reigniting market concerns over crude oil supply.

Market data shows that West Texas Intermediate (WTI) crude oil futures on the New York Mercantile Exchange surged as much as 5% intraday, breaking the $83 per barrel mark and partially recovering from the roughly 14% loss over the previous three days. At the same time, Brent crude oil futures settled near $84 per barrel in London on Tuesday.

On the geopolitical front, the U.S. military issued a statement via social media platform X, claiming that its troops stationed in the Middle East successfully intercepted an “attempted attack” from Iran. In addition, sources revealed that Iran-backed Iraqi militia launched drone attacks for a second consecutive day against oil facilities in Saudi Arabia’s Eastern Region. This has intensified pressure on the Saudi Kingdom, which has already been struggling with offshore blockades restricting crude exports. The Saudi Ministry of Defense confirmed that the incoming drones were intercepted on Tuesday, but did not specify whether the oil facilities were damaged in the attack.

This month has seen extreme volatility in the crude oil market. At the start of June, as hostilities between the U.S. and Iran escalated again and Yemen’s Houthi militants threatened to block Saudi ports, the conflict spread to the Red Sea region, sending oil prices soaring. Subsequently, as tensions eased somewhat, prices gave back part of the gains. Currently, the market’s focus has shifted back to actual crude oil supply, with shipping through the Strait of Hormuz still facing disruptions and persistently limited capacity.

On the diplomatic front, Iran revealed that it had made clear to Oman that the proposal for traffic in the critical Strait of Hormuz—essentially a 50-50 division between Iran and Oman—could not meet Tehran’s demands. Iranian Deputy Foreign Minister Kazem Gharibabadi made a strong statement on state television, insisting that all entry routes must be under Iran’s full control and that Iran must also control part of the outbound lanes.

There are also signs of dialogue at the diplomatic level. U.S. President Trump met with visiting Israeli Prime Minister Netanyahu, with Washington working to avoid another bombing campaign inside Iran. As a joint military ally with the U.S. since February this year, Israel signaled a willingness to negotiate in these talks. Afterward, an Israeli spokesperson stated that all parties preferred the “easy path,” meaning resolving the issue through negotiations, rather than the “difficult path” of military action.

Regarding the market outlook, Rob Thummel, senior portfolio manager at asset management firm Tortoise Capital Advisors LLC, analyzed: “Near-term crude oil futures contracts have downside potential, but unless some sort of diplomatic resolution is reached, longer-dated contracts are likely to move higher.”

There is also new data supporting supply-side pressure. According to documents, the American Petroleum Institute (API) reported that commercial crude inventories in the U.S. fell by 3.3 million barrels last week, with stockpiles at the critical Cushing, Oklahoma delivery hub also declining. The more official inventory data from the U.S. Energy Information Administration (EIA) will be released later on Wednesday, providing further guidance for the market.