Oil prices rebound as traders weigh Middle East tensions and market outlook

Oil prices rose after a decline on Wednesday, as traders assessed tensions in the Middle East and market balance prospects through 2025, according to Bloomberg.

Brent reached around $76 per barrel, while West Texas Intermediate (WTI) traded near $72.

This rebound was largely affected by deescalation efforts in the Middle East, as U.S. Secretary of State Antony Blinken held talks with Saudi Crown Prince Mohammed bin Salman in Riyadh about efforts to secure a ceasefire in Gaza and Lebanon.

Earlier, Blinken had visited Israel, where Israel vowed to respond to Iran following a missile attack earlier this month.

Global Factors

Oil prices have seen volatile trading this month as traders evaluate supply risks in the Middle East, which supplies about a third of the world’s oil, along with mixed demand signals.

While crude consumption has slowed in China, the largest importer, despite government incentives, stronger signs have emerged from the U.S., where refineries are operating at their highest processing rates in six years.

To hedge against the potential price spike caused by supply disruptions in the Middle East, traders are holding a record number of option contracts. Open Brent options surpassed 4 million contracts for the first time this week, equivalent to 4 billion barrels.

The mid-week oil price drop—where Brent closed down more than 1%—was triggered by data showing U.S. oil inventories had risen by over 5 million barrels.

Increased U.S. production is expected to create a surplus by 2025, while spare capacity in OPEC+ approaches record levels, according to the International Energy Agency (IEA).