Global oil prices rallied more than 4% on Wednesday, July 29, after Iran launched another wave of ballistic missiles targeting US military forces in the Middle East, reviving fears that escalating regional tensions could threaten global energy supplies.
The recovery was also supported by a sharp decline in US crude oil inventories and growing speculation that OPEC+ may postpone planned production increases later this year. Together, these developments encouraged traders to return to the market following a steep three-day selloff.
As of 00:47 GMT, Brent crude futures climbed 4.2% to $87.62 per barrel, while West Texas Intermediate (WTI) crude futures gained 4.1% to $82.49 per barrel. The rebound came after both benchmarks had fallen roughly 15% over the previous three trading sessions as optimism over diplomatic progress temporarily reduced concerns about supply disruptions.
Beyond geopolitical developments, oil prices also found support from stronger-than-expected inventory data.
Industry estimates from the American Petroleum Institute indicated that US crude stockpiles declined by around 3.3 million barrels last week. A larger-than-expected inventory draw typically signals healthy demand or tighter supply conditions, both of which are supportive for crude prices.
Traders are now awaiting official inventory figures from the US Energy Information Administration (EIA) to confirm whether the tightening trend continues.
Rebounds After Three-Day Selloff
The latest rally follows a sharp correction earlier this week, during which WTI crude lost approximately 15% from its recent high near $93.50 per barrel. That decline was driven largely by traders taking profits as hopes for renewed diplomacy between the United States and Iran temporarily reduced concerns over supply disruptions.
However, Wednesday’s missile attack quickly shifted market sentiment back toward risk, prompting investors to rebuild bullish positions in anticipation of potential supply shocks.
For traders, this development highlights how quickly sentiment in the oil market can shift from optimism to risk aversion. Geopolitical headlines remain one of the strongest catalysts for crude price movements, especially when they involve major oil-producing regions such as the Middle East.
At the same time, falling US inventories and the possibility of OPEC+ delaying additional production create a combination of supply-side factors that could support higher oil prices if tensions continue to escalate.
Traders should closely monitor upcoming geopolitical developments, official US inventory data, and future OPEC+ announcements, as these events could significantly influence short-term volatility across crude oil, energy stocks, commodity-linked currencies, and broader financial markets.
