FX.co ★ Oil Prices Volatile Amid Escalating Middle East Tensions

Crude oil hovered around $88 a barrel on Wednesday, after sliding more than 3% in the previous session and giving back earlier gains from Asian trading, as traders weighed mounting tensions in the Middle East. Iran carried out strikes on several Gulf states, including Bahrain, Jordan, and Kuwait, following US “self-defense strikes” launched in response to the downing of an American helicopter. Traffic through the Strait of Hormuz remains heavily disrupted, with Iran blocking most shipping in the vital chokepoint, while the US has introduced its own restrictions on Iranian ports. Even so, US Energy Secretary Chris Wright noted that vessel traffic in the Gulf and oil exports through the Strait are increasing despite the ongoing disruptions. At the same time, API data showed that US crude inventories dropped by 9.1 million barrels last week to a four-month low, as buyers sought to replace supplies curtailed by heightened tensions in the Persian Gulf.