London, Feb 4, 2026, 11:38 GMT — Regular session
- Brent crude rose 46 cents, or 0.7%, to $67.79 a barrel; WTI gained 52 cents, or 0.8%, to $63.73 by 1034 GMT
- Traders rebuilt a “risk premium” as fresh U.S.-Iran incidents revived worries over Gulf shipping routes
- Focus turns to U.S. inventory data later on Wednesday and U.S.-Iran talks in Oman on Friday
Oil prices edged higher on Wednesday after the U.S. shot down an Iranian drone and Iranian boats moved toward a U.S.-flagged vessel, pushing traders to price in fresh supply risk. Brent crude was up 46 cents, or 0.7%, at $67.79 a barrel by 1034 GMT, while U.S. West Texas Intermediate (WTI) was up 52 cents, or 0.8%, at $63.73. (Reuters)
The move matters because it puts the Strait of Hormuz back in play. A chunk of the world’s seaborne crude flows through that narrow waterway, and the market tends to react fast when the risk of disruption rises.
It also comes at an awkward moment for positioning. Traders have been trying to work out whether the week’s swings are a one-off geopolitical jolt or the start of something stickier, with supply risk meeting a shaky broader market tone.
Earlier in the week, crude had gone the other way. Oil settled more than 4% lower on Monday as signs of de-escalation in U.S.-Iran tensions weighed, while the stronger dollar and a broader commodities retreat added pressure, Reuters reported. (Reuters)
On Tuesday, prices snapped back. Brent rose $1.03, or 1.6%, to settle at $67.33 a barrel and WTI gained $1.07, or 1.7%, to settle at $63.21, after the latest incidents raised worries that diplomacy could be knocked off course. Bob Yawger, director of energy futures at Mizuho, wrote that the “diplomatic effort” to avoid a U.S. strike in Iran was “unravelling”. (Reuters)
The U.S. military said an Iranian Shahed-139 drone was flying toward the USS Abraham Lincoln aircraft carrier “with unclear intent” and was shot down by an F-35 jet in what it described as self-defence. Iran’s U.N. mission declined to comment, Reuters reported. (Reuters)
Separately, three pairs of Iranian gunboats approached the U.S.-flagged tanker Stena Imperative in the Strait of Hormuz north of Oman, maritime sources and a security consultancy said. Maritime risk management group Vanguard said the tanker did not enter Iranian internal waters and was escorted by a U.S. warship. (Reuters)
Oil has also found support from U.S. supply signals. Industry data cited by sources said U.S. crude stockpiles fell by more than 11 million barrels last week, based on figures from the American Petroleum Institute, an industry group; traders were waiting for the official U.S. government report.
That official report from the Energy Information Administration (EIA) — the U.S. government’s energy statistics agency — is due at 1530 GMT. Analysts polled by Reuters had expected a rise in crude inventories, which would cut against the bullish read from the API figures.
Diplomacy stays in the frame. The U.S. and Iran are due to hold talks in Oman on Friday after Tehran requested a venue change and pushed to keep the agenda focused on its nuclear programme, a regional official said; a source familiar with the situation said Jared Kushner and U.S. envoy Steve Witkoff were expected to take part, alongside Iranian Foreign Minister Abbas Araqchi. (Reuters)
Oil’s gains were capped by a broader equities selloff that has spilled into other risk-sensitive assets. Crude often tracks stocks on days when investors are de-risking, even when the oil-specific story points the other way.
The risk to the upside is obvious: any further incident that hints at disrupted shipping through Hormuz can add to the price. The risk the other way is just as clear — if the Oman talks look credible and the waterway stays quiet, the “risk premium” (the extra price traders pay for potential disruption) can drain out quickly, as Monday showed.
