Oil prices rebound amid Iran-Israel tensions

Global oil prices rose in European trade on Wednesday for the first time in four days, with Brent trading above $90 once more amid mounting tensions between Iran and Israel.

The gains are curbed however by the dollar's recent surge, and the unexpected large US inventory buildup last week.

Prices 

US crude rose 0.65% to $85.86 a barrel, while Brent added 0.6% to $90.05 a barrel. 

US crude lost 1.4% yesterday while Brent shed 1.15% amid active profit-taking off six-month highs. 

Iran-Israel Tensions 

The Israeli government warned that if Iran attacked Israel, the Israeli army would respond with an attack on Iranian territory. 

Iran’s supreme leader Khamenei threatened to punish Israel, after accusing it of striking the Iranian consulate in Syria last week, killing 7 military officials. 

The mounting Israel-Iran tensions threaten a potential widening of the war between the two sides in the region, which could threaten supplies. 

The Dollar

The dollar index rose 0.75% on Wednesday against a basket of major rivals.

The gains came as markets now only expect two Federal Reserve rate cuts this year due to strong US inflation and labor data. 

US Stocks

Initial data from the American Petroleum Institute reported a buildup of 3 million barrels in US crude stocks last week, above estimates of 2.4 million. 

According to the data, total US stocks are now up to 461.1 million barrels, the highest since mid-2023, and a negative sign for demand in the US.

 Now traders await official data from the EIA later today, expected to show a buildup of 0.9 million barrels last week. 

Oil Prices Outlook 

Goldman Sachs’ analysts expect Brent to remain below $100 a barrel, provided no new surprising geopolitical hits take place.