Oil prices experienced a rebound of approximately 1% on Wednesday, following a decline to a seven-week low in the prior session. This recovery was bolstered by a recent Iranian response to U.S. military strikes, which has further undermined prospects for peace. The recent escalation occurred after the U.S. military engaged Iranian positions, following President Donald Trump’s commitment on Tuesday to respond to the overnight downing of a U.S. Apache attack helicopter. Brent crude futures increased by 83 cents, equivalent to 0.9%, reaching $92.29 per barrel, whereas U.S. West Texas Intermediate crude saw a rise of 68 cents, or 0.8%, settling at $88.97 per barrel. The recovery comes after significant declines on Tuesday, with Brent settling at its lowest level since April 17 and WTI concluding at its weakest since May 29. Prices softened after Israel and Iran halted direct hostilities in response to Trump’s appeal for both parties to de-escalate.

The Islamic Revolutionary Guard Corps of Iran announced that its Aerospace Force launched long-range solid-fuel missiles targeting an airbase in Jordan, which accommodates US military personnel. According to the IRGC, the strike was aimed at four strategic locations, which included hangars that accommodate F-35 fighter jets and a command-and-control center. The group characterised the attack as a component of a wider retaliatory strategy targeting US military assets in the region. There was no immediate confirmation from either Jordanian or US officials concerning the extent of any damage or the success of the strikes on the intended targets. Separately, multiple explosions were reported in Bahrain, with over 16 blasts audible throughout the nation. Iraqi media reported that several Iranian missiles were observed en route to Bahrain. Tehran has issued a warning regarding the potential resumption of hostilities should Israel persist in its targeting of the Hezbollah militia in Lebanon.

Israel’s refusal to cease its operations against the Iran-backed group has complicated Trump’s attempts to transform the tenuous ceasefire associated with the wider U.S.-Israeli conflict with Iran into a sustainable agreement. Meanwhile, Iran persists in imposing restrictions on the majority of shipping through the Strait of Hormuz, a vital waterway that typically manages approximately one-fifth of global crude oil and liquefied natural gas flows. Concurrently, Washington has enacted a blockade on Iranian ports. The United States has acted as a marginal supplier of crude and refined products amid the ongoing conflict, enhancing exports to both Asia and Europe. Analysts observe that the reduction in U.S. crude inventories may constrain export capacity and provide additional support for oil prices. Morgan Stanley stated that the oil market is in “a race against time,” cautioning that the elements that have thus far hindered a more pronounced increase in prices may start to diminish if the Strait of Hormuz remains closed through June.

According to the broking, robust U.S. crude exports alongside diminished demand from China have contributed to mitigating a portion of the supply shock. However, it cautioned that global supplies could tighten again if disruptions in the strategic shipping route persist, particularly beyond the timeframe during which the U.S. and China can mitigate the impact. Haitong Futures indicated that crude prices may approach the upper limits of their trading range, as the tightening of supply-demand dynamics aligns with a swift reduction in global oil inventories. Analysts noted that even if a ceasefire is achieved, it may take months for shipping flows through the Strait of Hormuz to return to normal. Any damage to energy infrastructure could further impede the recovery process.