Crude Oil Prices Climb For 2nd Straight Day Amid Renewed Geopolitical Tensions

Crude oil prices increased for a 2nd consecutive day as geopolitical tensions re‑emerged after the US downed an Iranian drone near an American aircraft carrier in the Arabian Sea. West Texas Intermediate moved towards $64 a barrel after adding 1.7% on Tuesday, while Brent closed above $67.

The incident unsettled the oil market, reflecting heightened sensitivity to conflict risks across the Middle East. These developments occurred alongside new data signalling a substantial fall in US crude inventories, contributing further support to prices.

Drone Incident Near US Aircraft Carrier Lifts Risk Sentiment

The rise in oil prices was triggered by an encounter in which the US shot down an Iranian drone operating close to a US aircraft carrier. The resurgence of tension in the Arabian Sea raised concerns about security and stability in a major energy‑producing region.

Such incidents often prompt markets to reassess potential supply risks, especially when military activity occurs near key maritime routes. The event added renewed geopolitical pressure at a time when traders were already cautious about the broader regional climate.

Diplomatic Channels Remain Open Despite Skirmish

Despite the military encounter, both sides emphasised that diplomatic engagement continues. President Donald Trump reiterated that the US and Iran are maintaining discussions, signalling an effort to prevent escalation.

White House Press Secretary Karoline Leavitt confirmed that scheduled US–Iran negotiations remain set for Friday. These assurances helped moderate market reactions by indicating that official dialogue is still progressing even amid heightened tensions.

US Inventories Post Significant Weekly Drawdown

Oil prices also found support from the American Petroleum Institute’s report showing an 11.1 million‑barrel decline in US crude inventories last week. If verified by official data due on Wednesday, this would represent the largest drawdown since June.

Large inventory decreases often indicate tightening market conditions, reinforcing upward price momentum. The timing of this decline, coming alongside geopolitical turbulence, contributed to a firmer outlook for near‑term supply dynamics.

Additional Tensions Emerge in The Strait of Hormuz

Further unease developed after reports that a US‑flagged oil tanker, the Stena Imperative, was hailed by Iranian ships while navigating the Straits of Hormuz. The tanker, which forms part of a US military fuel procurement programme, was reportedly “harassed” by Iran’s Islamic Revolutionary Guard Corps during its transit.

The waterway is a crucial chokepoint for global oil flows, and any disruption poses potential risks to supply continuity. This added another layer of market sensitivity at a time when regional dynamics remain fragile.

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Conclusion

Oil prices continued rising as geopolitical events in the Arabian Sea and the Straits of Hormuz shaped market sentiment. A combination of military incidents, diplomatic developments, and a significant US inventory draw contributed to gains in both WTI and Brent.

While official reassurances helped temper immediate volatility, traders remain focused on evolving tensions across the region. The upcoming OPEC+ decision and Wednesday’s official inventory data are likely to guide short‑term market direction.

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