Oil prices climbed sharply on Wednesday, extending strong gains from the previous two sessions as the escalating conflict involving the United States, Israel, and Iran heightened fears of disruptions to global crude supply.
At 03:40 ET (08:40 GMT), Brent crude futures for May delivery were up 3.5% at $84.25 per barrel, while U.S. West Texas Intermediate crude futures rose 3.4% to $77.10 per barrel.
Both benchmarks had already surged nearly 5% on Tuesday, following a roughly 7% rise earlier in the week. Brent prices reached their highest level since July 2024.
Traders focus on supply risks
The Middle East crisis, which began over the weekend after coordinated strikes by U.S. and Israeli forces on Iranian military targets killed Supreme Leader Ayatollah Ali Khamenei, continued to escalate on Wednesday. U.S. Admiral Brad Cooper, commander of American forces in the region, said more than 2,000 Iranian targets have been struck.
Iran has responded with missile and drone attacks targeting neighboring Arab countries that host U.S. military bases. Tehran has also issued warnings to global shipping companies and targeted oil tankers moving through the Strait of Hormuz, the narrow passage responsible for roughly one-fifth of the world’s oil shipments.
The risk to traffic through Hormuz — a key export route for crude from major producers such as Saudi Arabia, Iraq, and the United Arab Emirates — has added a substantial geopolitical risk premium to oil markets.
“The disruption to oil flows through the Strait is starting to affect oil flows further upstream,” ING analysts said in a note.
They also pointed to reports indicating that Iraq has begun shutting in output at the Rumaila oil field, its largest, as well as at West Qurna 2, with around 1.2 million barrels per day reportedly taken offline.
Goldman raises 2026 oil price forecasts
Goldman Sachs on Wednesday lifted its average price forecasts for the second quarter of 2026, increasing its Brent projection by $10 to $76 per barrel and its WTI estimate by $9 to $71.
According to the bank, these projections assume that reduced oil flows through the Strait of Hormuz will result in significant declines in OECD oil inventories and Middle Eastern production in March.
Goldman said the risks around its forecasts remain skewed to the upside, pointing to the possibility of longer disruptions to oil exports through the Strait and potential damage to production facilities.
“If Hormuz volumes were to remain flat for 5 additional weeks, Brent prices would likely reach $100, a level associated with larger demand destruction to prevent inventories from falling to critically low levels,” the bank said in a note.
That said, “the supply disruption tailwind could quickly turn into a demand destruction headwind. A prolonged conflict and sustained high prices may fuel oil-driven inflation and amplify economic risks stemming from renewed tariff uncertainty. That combination could weigh on consumption and ultimately pressure oil prices,” said Nikos Tzabouras, Senior Market Analyst at Tradu.com.
Trump signals support for tanker traffic through Hormuz
Market participants are also paying attention to comments from U.S. President Donald Trump, who indicated that the U.S. Navy would escort commercial vessels if necessary and promised government support to ensure safe passage.
“The promise of such guarantees comes as insurers are cancelling war risk coverage for vessels moving through the Strait of Hormuz,” ING analysts wrote.
“This is welcome news, but clearly it won’t happen overnight,” they added.
While the escalation in military tensions has supported oil prices, efforts by governments to secure shipping routes could help limit further gains in the near term.