Oil extends gains as Middle East talks stall, hostilities flare

LONDON - Oil prices rose more than 2% on Wednesday, extending gains from the previous session, as hostilities in the Middle East erupted anew and talks between Tehran and Washington showed little progress.

Brent futures gained $2.3, or 2.4%, to $98.30 a barrel at 0841 GMT, while U.S. West Texas Intermediate (WTI) crude climbed $2.34, or 2.5%, to $96.10. Brent and WTI hit their highest since May 27 and May 22, respectively, earlier in the day.

Iran launched ballistic missiles towards regional neighbours Kuwait and Bahrain and U.S. forces conducted strikes on Iran's Qeshm Island.

Tom Baker, a managing director for Bahrain for global commodities trader Vitol, told an energy conference on Tuesday that the global oil market was underpricing some risks from the Iran war, even as the conflict entered its fourth month.

The International Energy Agency's warning that global oil inventories could hit critical levels ahead of the peak summer demand period if stock draws continue at their current pace was adding to the bullish sentiment.

"The stalling in the U.S.-Iran negotiations and IEA warnings of critical global low stock levels are adding upward layers in risk premium in benchmark prices," said Emril Jamil, a senior analyst for oil at LSEG.

U.S. crude oil inventories fell for a seventh straight week last week, according to market sources citing American Petroleum Institute data released on Tuesday. Crude stocks declined by 6.8 million barrels in the week ended May 29, the sources said.

U.S. government data on stockpiles is due at 10:30 a.m. ET (1430 GMT) on Wednesday. [EIA/S]

(Additional reporting by Nicole Jao in New York and Jeslyn Lerh in Singapore; Editing by Cynthia Osterman, Kevin Buckland and Tomasz Janowski)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 3, 2026 at 6:45 AM.