How will market open today: Oil prices jumped over 1% on Wednesday following reports that Israel may be preparing to strike Iranian nuclear facilities, sparking fresh concerns over potential disruption in the Middle East, a critical oil-producing region.

Brent, WTI climb

Brent crude futures for July delivery rose by 86 cents, or 1.32%, to $66.24 a barrel, while US West Texas Intermediate (WTI) crude futures climbed 90 cents, or 1.45%, to $62.93 in early Asian trading.

Geopolitical risk lifts oil prices

According to a CNN report citing multiple US officials, new intelligence suggests Israel is preparing for potential military action against Iranian nuclear sites. While it remains unclear whether a final decision has been made by Israeli leadership, the prospect of conflict has already begun to rattle markets.

Following the report, US crude futures surged by more than $2 a barrel, and Brent futures rose over $1. Analysts warn that any Israeli strike on Iran—OPEC’s third-largest oil producer—could severely disrupt oil flows and ignite broader instability across the Gulf.

Market concerns

Market fears are further exacerbated by the possibility that Iran could retaliate by blocking the Strait of Hormuz, a critical chokepoint for global oil shipping. Approximately 20% of global petroleum passes through the narrow waterway, including exports from Saudi Arabia, Kuwait, Iraq, and the United Arab Emirates.

“Any significant military escalation involving Iran could lead to immediate constraints on oil supply, particularly if the Strait of Hormuz becomes a flashpoint,” said an energy analyst with a global commodities firm.

Oil supply

Despite the geopolitical risks, some indicators point to a modest improvement in oil supply. According to data from the American Petroleum Institute (API), US crude oil inventories rose by 2.5 million barrels for the week ending May 16. However, gasoline and distillate inventories fell during the same period.

Investors are awaiting official inventory figures from the US Energy Information Administration (EIA), due later on Wednesday, for a clearer picture of domestic supply trends.

Kazakhstan defies OPEC+ pressure

Adding to supply-side developments, Kazakhstan has reportedly increased its oil production by 2% in May, according to an industry source. The move defies existing OPEC+ agreements, which have urged member nations to curtail output to support prices amid market volatility.

(With Reuters inputs)