Brent Crude Falls Toward $91 as Traders Weigh Middle East Risks and U.S. Inflation Data

Brent crude futures fell toward $91 per barrel on Wednesday, reversing earlier gains as investors assessed escalating geopolitical tensions in the Middle East while preparing for a key U.S. inflation report that could influence the Federal Reserve’s monetary policy outlook.

Oil prices initially moved higher after Iran launched attacks against several Gulf nations, including Bahrain, Jordan, and Kuwait, following what Tehran described as retaliation for recent U.S. military actions. The escalation came after the United States conducted what it called “self-defense strikes” in response to the downing of an American helicopter.

Despite heightened geopolitical risks and concerns over potential supply disruptions, crude prices lost momentum as traders shifted their focus to macroeconomic factors, particularly the upcoming U.S. Consumer Price Index (CPI) report.

A stronger-than-expected inflation reading could reinforce expectations that the Federal Reserve may deliver another interest-rate increase later this year. Higher borrowing costs typically weigh on economic activity and industrial demand, raising concerns about slower global growth and reduced energy consumption.

At the same time, concerns persist that tighter monetary policy could slow economic activity and fuel consumption across major economies, partially offsetting the impact of potential supply disruptions.

Supporting the market, industry data released by the American Petroleum Institute (API) showed that U.S. crude oil inventories declined by 9.1 million barrels last week, reaching their lowest level in four months. The sharp drawdown suggests refiners and buyers sought to replace supplies amid growing uncertainty surrounding energy flows through the Persian Gulf.

The inventory draw added support to prices, as U.S. crude stockpiles fell to their lowest level in four months amid ongoing disruptions affecting energy flows in the Persian Gulf.

Markets remained focused on developments in the Middle East, upcoming U.S. inflation data, and the implications for monetary policy and global energy demand.