Oil prices rose modestly in Asian trading on Wednesday as escalating tensions between Israel and Hamas reignited fears of Middle East supply disruptions, partially reversing two days of losses. Brent crude futures for December climbed 0.3% to $64.58 per barrel, while West Texas Intermediate (WTI) futures increased 0.3% to $60.30 by 21:09 ET (01:09 GMT).
The uptick came after Israel launched fresh attacks on Gaza, accusing Hamas of breaching a U.S.-brokered ceasefire agreement established earlier in October. The renewed conflict raised concerns about potential instability in the region, a key oil transit hub. However, U.S. officials maintained that the ceasefire remained intact, aiming to end over two years of hostilities.
Adding to the bullish sentiment, U.S. sanctions targeting Russian energy exports and industry data showing an unexpected drawdown in U.S. crude inventories supported market optimism. These developments suggested tighter short-term supply, offsetting fears of oversupply from major producers.
Still, market caution prevailed ahead of the U.S. Federal Reserve’s policy announcement. Investors widely expect the Fed to implement a 25-basis-point interest rate cut following recent data showing cooling inflation. Yet, attention remains on Chair Jerome Powell’s remarks regarding the pace and extent of future rate cuts, which could influence the dollar and, consequently, oil demand. The greenback’s slight strength provided modest support to crude prices.
Despite the rebound, oil markets remain under pressure in 2025 amid concerns of weakening global demand and rising output. Reports suggest that OPEC+ is preparing to ramp up production further, scaling back two years of supply curbs. This potential increase could reintroduce a supply glut, limiting price gains in the months ahead.