Oil prices rise as new Middle East hostilities flare and talks stall

Oil prices climbed early Wednesday as new hostilities erupted in the Middle East and diplomatic talks between Iran and the United States showed little progress. Brent crude futures rose 1.09% to $97.05 a barrel, and U.S. West Texas Intermediate crude gained 1.08% to $94.77.

Iran launched ballistic missiles toward Kuwait and Bahrain, which missed their targets, according to the U.S. military. U.S. forces responded with strikes on Iran's Qeshm Island. The market is closely watching developments, with Iran reportedly reviewing a proposed agreement to halt the conflict. However, communication between Iran and Washington has been sparse in recent days.

Analysts note that reopening the Strait of Hormuz faces challenges due to extensive mining by Iran. While vessel transits have slightly increased, they remain well below pre-conflict levels. The conflict has been in a stalemate for over three months, with a fragile ceasefire in place.

Adding to market concerns, U.S. crude oil inventories decreased for the seventh straight week. Preliminary data from the American Petroleum Institute indicated a drop of 6.8 million barrels for the week ending May 29. Official government data on stockpiles is expected later Wednesday.

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There has been a slight tick up in vessels attempting the journey, but total transits remain significantly below pre-conflict levels.