US Crude Hits $90 as Iran Strikes Kuwait, Jordan and Bahrain in Retaliation, EIA Reports 4.5 Million-Barrel Inventory Draw

U.S. crude oil futures hit $90 per barrel Wednesday as Iran retaliated against American strikes by launching drone and missile attacks on Kuwait, Jordan and Bahrain, all U.S. allies. International benchmark Brent rose 4.5% to $94.52 a barrel on Tuesday, while West Texas Intermediate added roughly 5% to $90.03 per barrel. Iran also struck a Saudi tanker in or near the Strait of Hormuz, which Qatar condemned and called the waterway off-limits as a bargaining chip, underscoring the threat to one of the world's most critical oil chokepoints.

The military escalation compounded already-tight supply conditions. The EIA reported Wednesday that U.S. commercial crude inventories fell 4.5 million barrels in the week ending August 28 to 424.5 million barrels, roughly 1% above the five-year seasonal average. Total crude stocks including the Strategic Petroleum Reserve fell by a combined 7.572 million barrels, with the SPR contributing a 3.122 million-barrel draw. The API had reported a smaller 2.6 million-barrel commercial draw a day earlier. Gasoline inventories also declined, though distillate stocks rose.

Market analysts noted that global oil inventories are at all-time lows even after absorbing more than 400 million barrels released from strategic petroleum reserves and floating storage. Middle Eastern production remains roughly 7.4 million barrels per day below February levels, and Strait of Hormuz exports are running at least 4 million barrels per day below normal. With U.S. midterm elections 61 days away, analysts expect prices to stay elevated and volatile. Energy stocks declined in premarket trading, and observers flagged unusually aggressive Chinese bidding in Dubai crude markets, with two Chinese buyers outbidding each other in what remained of the Dubai Marker of Close session.