Brent crude futures rose to $95.63 a barrel, up 98 cents, or about 1.04%. The move keeps the global oil benchmark close to the $100 a barrel level, a price that has strong importance for markets, companies and consumers.
The rise came after a sharp jump in oil prices earlier in the week. On Tuesday, Brent crude settled at $94.65 a barrel, up $4.16, or 4.6%. That was its highest close since July 24.
The latest move shows that oil traders remain worried about supply. The main concern is the conflict between the United States and Iran and the risk that the crisis could affect key oil routes in the Middle East.
Middle East Tensions Remain the Main Concern
The oil market has faced fresh pressure after the United States and Iran exchanged strikes. The latest attacks have reduced hopes for a quick return to calm.
For oil traders, the main issue is not only the conflict itself. The bigger concern is the effect on the flow of crude from the region. The Strait of Hormuz is one of the most important oil routes in the world. A large share of global oil trade passes through this narrow waterway.
Any major problem in the strait could make oil supplies less certain. Even before a real shortage appears, traders may push prices higher because they fear future supply problems.
This is why crude prices have reacted so fast to new reports from the region. Oil is a global market, and a disruption at a key supply route can affect prices far beyond the Middle East.
US Oil Stocks Give Prices More Support
Another reason for the rise is a sharp fall in US crude oil stocks.
The US Energy Information Administration said crude inventories fell by 4.5 million barrels in the week ended August 28. Total stocks fell to 424.5 million barrels. The drop was much larger than the 1.1 million-barrel decline that analysts had expected.
The data gave oil prices another source of support. A fall in crude stocks can suggest that refineries and exporters are taking more oil out of storage.
US refinery use also rose. Refinery use reached 98%, the highest level since August 2018. Refinery crude runs rose by 103,000 barrels per day during the week.
US crude exports also rose by 691,000 barrels per day to 4.5 million barrels per day. At the same time, net crude imports fell by 79,000 barrels per day.
These figures show strong activity in the US oil market. They also help explain why crude stocks fell so sharply.
Gasoline Stocks Also Fall
The US data showed pressure in the fuel market as well.
Gasoline inventories fell by 1.2 million barrels to 205.7 million barrels. That decline came even as analysts had expected a larger drop of 1.8 million barrels.
US gasoline prices have also stayed high. Average prices were above $4 a gallon throughout August, according to data cited by Reuters.
Diesel and heating oil stocks moved in the other direction. Distillate stocks rose by 0.8 million barrels to 104.2 million barrels. Yet stocks on the US East Coast fell to a record low.
The mixed data show that the US fuel market remains under pressure. Some parts of the market have enough supply, while others face tighter conditions.
Why the $100 Level Matters
Brent crude at $95.63 is only a few dollars below the $100 mark. That makes the next move especially important for traders.
The $100 level has strong psychological value. It is a simple number that can shape market expectations. If Brent moves above it and stays there, companies may have to rethink their fuel costs, transport costs and business plans.
A higher oil price can also affect inflation. Oil is a basic part of the global economy. It affects petrol, diesel, air travel, shipping, chemicals, plastics and many other products.
If crude stays close to $100 for a long period, the effect can spread across the wider economy.
Central Banks Face a New Problem
Higher oil prices can create a difficult situation for central banks.
When energy costs rise, inflation can move higher. Central banks may then need to keep interest rates high for longer or take a more cautious approach to rate cuts.
This concern has already appeared in bond markets. Higher energy prices have raised fears that inflation may stay high for longer. US and European bond yields have also faced pressure as investors assess the effect of the oil and gas price surge.
The problem becomes harder if economic growth is weak at the same time. High energy costs can hurt households and companies, while higher interest rates can make borrowing more expensive.
That creates a difficult balance for policymakers.
India Could Face More Pressure
Higher crude prices also matter for countries that rely heavily on oil imports.
India is one of the world’s largest oil importers and consumers. A sharp rise in crude prices can increase the country’s import bill and put pressure on inflation.
Indian financial markets have already reacted to the oil shock and wider Middle East concerns. On Wednesday, the Nifty 50 fell 0.59% to 23,914.45, while the Sensex fell 0.49% to 76,570.35.
Higher oil prices can also put pressure on the local currency because more money may be needed to pay for crude imports.
For businesses, the effect depends on their sector. Airlines, transport firms and other heavy fuel users can face higher costs. Oil producers and some energy companies may benefit from higher crude prices.
What Traders Will Watch Next
The next major moves in the oil market will depend on events in the Middle East and fresh US supply data.
Any sign of a wider conflict could push crude higher. A clear path toward a ceasefire or a safe return of oil shipments could have the opposite effect.
Traders will also watch US crude stocks, refinery activity and fuel demand. These figures can show whether the physical oil market is tight or whether higher prices are mainly due to geopolitical risk.
The Strait of Hormuz will remain a key focus. The waterway is vital for global energy trade, so any new threat to ships or oil exports could cause another sharp price move. Reuters said the strait carries about one-fifth of the world’s oil and LNG.
Oil Market Enters a Sensitive Phase
Brent crude at $95.63 a barrel, up 98 cents, shows how sensitive the oil market has become to both supply data and geopolitical news.
The move is not huge on its own, but the wider price trend matters. Brent has risen sharply from its recent levels, and the market has moved close to $100 after a major jump earlier in the week.
For now, traders have two major concerns: the risk of supply disruption from the Middle East and tighter US crude stocks.
If those pressures remain, Brent could test the $100 level. If tensions ease and supply risks fall, some of the recent price gains could fade.
For consumers, companies and policymakers, the key issue is not just where Brent settles on one day. The bigger question is whether crude can remain near these high levels for weeks or months. A short price jump may have a limited effect. A long period of expensive oil could have a much wider impact on inflation, business costs and global economic growth.
