Oil prices rise more than 1% amid escalating Iran tensions and expectations of a sharp drop in U.S. inventories.

Oil prices climbed sharply during Asian trading on Wednesday, driven by reports of escalating tensions between the United States and Iran, which heightened fears of possible supply disruptions in the Middle East.

Crude prices also found support from industry figures showing an unexpected and substantial drawdown in U.S. oil inventories last week, as severe cold weather across the country curtailed production.

April Brent futures advanced 1.2% to $68.15 per barrel, while U.S. West Texas Intermediate crude rose 1.4% to $63.69 per barrel as of 21:01 ET (02:01 GMT).

Oil prices climb amid escalating U.S.-Iran tensions ahead of nuclear negotiations

Overnight reports indicated that U.S. forces shot down an Iranian drone that was approaching a U.S. aircraft carrier in the Arabian Sea.

In a separate incident, several Iranian gunboats were observed nearing a U.S.-flagged oil tanker in the Strait of Hormuz.

These developments came just ahead of planned talks between Washington and Tehran later this week. However, Iranian officials have reportedly insisted that the negotiations—scheduled for Friday—be limited to bilateral discussions focused solely on nuclear issues, raising uncertainty over whether the talks will proceed at all.

U.S. President Donald Trump has warned of further military action if Iran fails to comply with U.S. demands to rein in its nuclear program, while Tehran has vowed strong retaliation against any U.S. aggression.

Any escalation of military activity in the Middle East could potentially disrupt regional oil supplies, a risk that has helped support crude prices in recent trading sessions.

U.S. oil inventories fall sharply amid production disruptions, API data shows

Oil prices also found support from industry figures showing a large and unexpected drawdown in U.S. crude inventories.

Data from the American Petroleum Institute indicated that U.S. stockpiles fell by 11.1 million barrels in the week ended January 30, sharply contrasting with expectations for a 0.7 million-barrel build.

API figures often signal a similar outcome in the official inventory report due later in the day.

The sizeable drawdown was driven by severe cold weather across the United States, which disrupted oil production nationwide and hampered exports from the Gulf Coast.

Supply disruptions in the U.S. have also contributed to stronger oil prices in recent weeks.

Sources: Ambar Warrick