Oil rises as US-Iran tension escalates after Iraq strikes, missile attack

Oil prices rose more than $3 a barrel on Wednesday after joint strikes in Iraq by the United States and Saudi Arabia, and the interception of Iran's ballistic missiles aimed at U.S. forces in the Middle East, while U.S. crude inventories shrank. Brent futures increased by $3.30, or 3.9%, to $87.39 a barrel by 0300 GMT, while U.S. West Texas Intermediate (WTI) crude rose $3.05, or 3.8%, to $82.31 a barrel.

ING analysts stated that "Renewed strength comes after the U.S. said it intercepted a surprise attack on U.S. troops." They also noted that Saudi Arabia intercepted drones from Iranian-backed groups in Iraq, which were targeting Saudi energy infrastructure, and that U.S. and Saudi forces launched strikes on weapon sites across eastern Iraq. The U.S. military said it intercepted ballistic missiles launched by Iran towards U.S. forces in the Middle East in what Washington called "an attempted surprise attack" by Tehran. Iran's elite Revolutionary Guards later said they fired several ballistic missiles at a U.S. air base and a U.S. Central Command centre in Jordan. Saudi Arabia also said its armed forces, in coordination with U.S. Central Command, carried out "targeted strikes" against Iran-backed groups in Iraq it blamed for drone attacks on the kingdom's oil facilities. U.S. crude inventories fell by about 3.3 million barrels in the week ended July 24, market sources said on Tuesday, citing data from the American Petroleum Institute.