By: Economy Middle East

Oil prices recovered some losses on Wednesday after renewed U.S. military action against Iran, following the downing of an American helicopter, revived concerns over potential supply disruptions, and raised questions about the durability of a fragile ceasefire.

As of 4:07 GMT, Brent crude futures had gained 58 cents or 0.63 percent to $92.03 per barrel, while U.S. West Texas Intermediate (WTI) crude futures advanced 52 cents or 0.59 percent to $88.72 a barrel. The rebound followed a sharp decline in the previous session, when both benchmarks fell about 3 percent and touched their lowest levels in seven weeks.

Renewed U.S.-Iran tensions support oil prices

Oil prices rose after Washington carried out strikes on Iranian targets near the Strait of Hormuz on Tuesday after a U.S. Apache helicopter was downed in what American officials said was an Iranian drone attack. President Donald Trump described the operation as a proportional response, while Tehran warned it would retaliate against any further military action.

The renewed tensions have raised fears that recent efforts to ease the conflict could unravel. Earlier this week, Iran and Israel agreed to suspend attacks following calls from Trump for de-escalation. Markets had viewed the temporary halt in hostilities as a signal that the crisis could shift toward a diplomatic track, triggering a selloff in oil prices.

Investor attention remains fixed on the Strait of Hormuz, one of the world’s most important energy chokepoints, through which about 20 percent of global oil and liquefied natural gas supplies are transported.

While U.S. Energy Secretary Chris Wright said shipping activity and oil exports through the Gulf have shown signs of improvement in recent weeks, he noted that energy flows remain below normal levels and may require months to fully recover.

U.S. crude inventories post sharp decline

Oil prices also drew support from industry data showing a substantial decline in U.S. crude inventories last week. According to the American Petroleum Institute, U.S. crude stockpiles fell by 9.12 million barrels, significantly exceeding analysts’ expectations for a 3.4 million-barrel draw.

The report also showed gasoline inventories decreased by 1.19 million barrels, while distillate stocks, which include diesel and heating oil, increased by 1.32 million barrels. The larger-than-expected drop in crude inventories added to concerns that global supplies could tighten further if tensions in the Middle East continue to escalate.

Market participants are now awaiting official inventory figures from the U.S. Energy Information Administration, due later on Wednesday, to verify the industry data.