Oil prices dropped Wednesday, reversing an earlier spike, after Iran’s rocket attack on American forces in Iraq failed to destroy major energy infrastructure that could have disrupted global crude supply.
Tehran launched more than a dozen ballistic missiles against multiple military bases housing U.S. troops in the early hours of Wednesday morning, according to Pentagon officials.
After an early spike, oil retreated from highs to turn negative as it became clear no energy infrastructure was targeted. There were no reports of casualties so far either, leading traders to believe maybe there will not be a wider conflict between the U.S. and Iran that could hamper oil flows.
An unexpected rise in crude oil inventories as reported by the U.S. Energy Information Administration also weighed on crude prices on Wednesday.
International benchmark Brent crude fell 1.5% to $67.26 U.S., a marked reversal after at first climbing more than 4% immediately after news of the attack. The initial surge in response to news of the attack sent Brent up to a high of $71.75 per barrel — its highest since September.
U.S. West Texas Intermediate crude dropped 1.9% to $61.5 in a similar move, sinking from an initial 4.5% spike. WTI crude hit a session high of $65.65 immediately after the attack, its highest level since April.
Oil prices extended their decline Wednesday morning after the government reported morning that U.S. inventories of crude oil rose unexpectedly last week, with stockpiles climbing 1.2 million barrels to 431.1 million barrels.
That puts inventories around its five-year average for this time of year, the EIA said. Economists polled by Dow Jones had predicted crude stockpiles would drop 3.2 million barrels from the prior week.