Oil Jumps 5% as Middle East Clashes Resume, WTI Tops $83

Oil jumped as much as 5% intraday as fighting resumed in the Middle East, including what the U.S. military described as an attempted surprise Iranian attack on American forces and drone strikes targeting Saudi oil facilities.

On July 28, Bloomberg reported that West Texas Intermediate rose as much as 5% to above $83 a barrel. The move recouped part of a 14% slide over the previous three trading sessions. Brent had settled around $84 a barrel the previous day.

U.S. Central Command said Iran's Islamic Revolutionary Guard Corps fired several ballistic missiles at U.S. forces stationed in the region. CENTCOM described the barrage as an "attempted surprise attack" and said all of the missiles were intercepted.

Attacks targeting Saudi oil facilities also continued. An Iran-backed Iraqi militia launched drones toward oil facilities in eastern Saudi Arabia for a second straight day. Saudi Arabia's Defense Ministry said the drones were intercepted but did not disclose whether the facilities were damaged.

Oil prices had surged this month after U.S.-Iran tensions flared again and Iran-aligned Houthi rebels threatened to blockade Saudi ports. Prices later surrendered part of those gains as tensions eased. But supply concerns resurfaced after military clashes broke out again while crude shipments through the Strait of Hormuz remained restricted.

Negotiations over the Strait of Hormuz are also faltering. Iran said a proposal to split control of the shipping lane evenly between Iran and Oman would not meet its demands. Kazem Gharibabadi, Iran's deputy foreign minister, said Tehran should control the entire inbound channel and part of the outbound route.

U.S. crude inventories also declined, according to the American Petroleum Institute. Stockpiles fell by 3.3 million barrels last week, and inventories at Cushing, Oklahoma, the key U.S. storage hub, also dropped. The U.S. government's official oil inventory data is due on Wednesday.