Oil Prices Rise as US-Iran Talks Stall and Middle East Fighting Intensifies

TLDR

• Brent crude climbed toward $97 a barrel, WTI near $95, up over 7% in two sessions
• US forces struck Iran’s Qeshm Island and intercepted Iranian missiles and drones
• Iran fired ballistic missiles at Kuwait and Bahrain, Kuwait suspended airport flights
• US-Iran nuclear deal talks appear stalled despite Trump saying negotiations continue
• US crude inventories fell 6.8 million barrels last week, far above expectations

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Oil prices rose for a third straight day on Wednesday as peace talks between the US and Iran showed little progress and fresh military exchanges in the Middle East rattled energy markets.

Brent crude climbed to around $97.46 a barrel, while West Texas Intermediate reached $95.23. Both contracts had already gained more than 7% over the previous two sessions.

The price jump came after a series of military incidents in the region. US forces intercepted Iranian ballistic missiles and drones aimed at Kuwait and Bahrain, and struck a command center in Iran in response.

Iran also launched a drone attack on Kuwait’s international airport, damaging a passenger building and forcing the country to suspend flights.

Middle East Tensions Drive Oil Higher

US forces carried out additional strikes on Iran’s Qeshm Island, which sits near the Strait of Hormuz. That waterway handles roughly one-fifth of the world’s oil supply.

BREAKING: Iran has launched a massive ballistic missile and drone attack, striking the US 5th Fleet headquarters in Bahrain along with US bases in Kuwait, Ali Al Salem + Arifjan, and an oil tanker near Dubai, in response to new US strikes on Qeshm Island and an Iranian oil tanker…

— The Hormuz Letter (@HormuzLetter) June 3, 2026

Any disruption to flows through the Strait of Hormuz has the potential to affect global energy supplies. Traders are pricing in a higher risk premium as the situation remains unresolved.

President Trump said he remains optimistic about reaching an interim deal with Tehran. However, Iranian state media reported that talks had been suspended, contradicting the White House position.

Trump is reportedly asking Iran to put specific nuclear concessions in writing before any preliminary agreement is signed. Iran had previously offered verbal assurances on certain nuclear terms, according to ABC News.

Inventory Data Adds to Price Pressure

The uncertainty has kept oil prices elevated and trading volatile. Open interest in Brent crude futures has fallen to its lowest level since August, as dealers pull back on risk.

“Clients are tired,” said Daan Struyven, Co-Head of Global Commodities Research at Goldman Sachs, speaking on Bloomberg TV. “It’s a challenging trading environment with headlines moving prices up and down.”

Warren Patterson, head of commodities strategy at ING, said risks remain skewed to the upside, especially heading into the third quarter when demand is typically stronger.

Supporting prices further, the American Petroleum Institute reported that US crude stockpiles fell by 6.8 million barrels in the week ending May 29. Analysts had expected a draw of just 3.6 million barrels.

Official inventory data from the US Energy Information Administration was due later Wednesday. Traders were also watching for the ADP employment report, ISM services survey, and factory orders data ahead of Friday’s nonfarm payrolls report.

The lack of a ceasefire extension agreement and continued uncertainty around Persian Gulf oil exports are keeping pressure on global crude supplies.