Oil prices extended gains during Wednesday's Asian trading session as renewed military tensions in the Middle East and stalled diplomatic efforts between Iran and the United States heightened concerns over global energy supplies.
By 3:20 pm AEST, Brent crude futures rose $1.07, or 1.1%, to US$97.07 per barrel, while U.S. West Texas Intermediate crude gained $1.17, or 1.3%, to US$94.93 per barrel.
The advance followed reports that Iran launched ballistic missiles toward Kuwait and Bahrain, though the missiles failed to strike their intended targets.
The U.S. Central Command said American forces responded by conducting strikes on Iran's Qeshm Island.
The renewed escalation comes as diplomatic negotiations aimed at ending the conflict remain showed little sign of progress, with Tehran continuing to review a U.S. proposal designed to halt hostilities.
Adding to supply concerns, the International Energy Agency (IEA) warned that global oil inventories could approach critically low levels ahead of the peak northern hemisphere summer driving season if current stock drawdowns continue.
"We're seeing stock draws continuing into the summer, and with the possibility or the likelihood that we reach critical levels or historical low levels just ahead of the peak summer demand," Toril Bosoni, head of the IEA's oil industry and markets division, was quoted as saying in a Reuters article.
Market participants remain focused on developments surrounding the Iran conflict, particularly the future of the Strait of Hormuz, a vital shipping route for global crude exports.
On the supply side, U.S. crude inventories provided additional support for prices after industry data pointed to another sizeable drawdown.
Figures from the American Petroleum Institute (API) showed U.S. crude stockpiles fell by 6.75 million barrels in the week ended 29 May, marking a seventh consecutive weekly decline and greater than an expected draw of 3.6 million barrels.
Investors are now awaiting official inventory figures from the U.S. Energy Information Administration (EIA), due later on Wednesday in the United States (Thursday AEST), for confirmation of tightening supplies.
