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Oil prices climbed more than 3 per cent in early Asian trade on Wednesday, recovering a portion of the previous session’s sharp losses, after industry data showed a larger-than-expected decline in US crude inventories and reports suggested OPEC+ could pause planned production increases later this year.
Brent crude futures rose $2.71, or 3.2 per cent, to $86.80 a barrel, while US West Texas Intermediate (WTI) crude gained $2.26, or 3.4 per cent, to $81.95 a barrel.
The rebound came a day after oil prices tumbled around 5 per cent to a two-week low, as hopes of renewed diplomacy between Washington and Tehran eased concerns over immediate supply disruptions linked to the conflict in West Asia.
US crude inventories fall
Supporting prices on Wednesday, US crude oil inventories fell by around 3.3 million barrels in the week ended July 24, according to reports citing data from the American Petroleum Institute (API).
However, refined fuel inventories moved in the opposite direction. Gasoline stockpiles increased by about 918,000 barrels, while distillate inventories, which include diesel and heating oil, rose by roughly 355,000 barrels from the previous week.
Investors will now await official inventory figures from the US Energy Information Administration (EIA), due later on Wednesday, for confirmation of the API data.
A drawdown in crude inventories is generally viewed as a sign of stronger demand or tighter supplies, offering support to oil prices.
OPEC+ may pause output increases
Another factor lifting the market was a Reuters report that OPEC+ is likely to suspend planned oil production increases for three months starting in October.
According to Reuters, the producer alliance is expected to complete the scheduled return of barrels that were previously withheld under voluntary production cuts before pausing further supply additions.
If confirmed, the move would signal a more cautious approach by the group amid heightened geopolitical uncertainty and volatile oil prices.
West Asia conflict keeps markets on edge
Oil markets have remained highly volatile in recent weeks due to the conflict involving the United States, Israel and Iran, which has disrupted global crude flows and raised concerns about supplies moving through the Strait of Hormuz.
The strategically important waterway handles roughly one-fifth of the world’s oil trade, making any disruption a major concern for global energy markets.
On Tuesday, prices had fallen sharply after optimism grew that diplomatic efforts between Washington and Tehran could resume following a temporary pause in hostilities.
US President Donald Trump, who halted a planned two-week US bombing campaign over the weekend, told Fox News on Tuesday that there had been “good talks” with Iran. However, he warned that the United States could launch fresh strikes if negotiations fail.
Iran, meanwhile, denied reports that it was seeking to restart negotiations with Washington.
Oman proposes Hormuz management plan
In another development, Reuters reported that Oman has presented Iran with a proposal to manage shipping through the Strait of Hormuz.
According to a Reuters, the plan would introduce voluntary transit fees for vessels using the strategic waterway. Backed by Gulf states, the proposal aims to restore confidence in commercial shipping and reduce disruptions caused by the conflict.
Markets will continue to monitor geopolitical developments alongside US inventory data and signals from OPEC+, as both factors are expected to shape oil prices in the coming weeks.
With inputs from agencies.
