Oil Prices Jump to 2-Month High on Middle East Concerns, Trade Optimism

Oil prices rose as a U.S.-China trade deal and soft inflation report boosted demand expectations while concerns about political instability in the Middle East sparked fears of supply disruptions.

West Texas Intermediate futures contracts, the U.S. crude oil benchmark, rose as much as 5.2% on Wednesday to trade above $68 a barrel for the first time since April 2, when President Trump’s “Liberation Day” tariff announcement pulled prices lower.

Prices surged in afternoon trading amid reports that the State Department had ordered the departure of all nonessential personnel at the U.S. Embassy in Baghdad to address security concerns amid mounting tensions in the Middle East.

Oil prices had risen earlier in the session after the U.S. and China agreed to a trade deal that eased fears about the economic fallout of a protracted trade war between the world’s two largest economies. A soft inflation report added to Wall Street’s optimism about demand.

The energy sector led stock market gainers on Wednesday. Oil companies were up, with Occidental Petroleum (OXY) gaining 2% and ConocoPhillips (COP) both finishing up more than 2%. Read Investopedia’s full coverage of today’s trading here.

Crude oil prices slumped to about $57 per barrel in early May, their lowest level since early 2021, after the Organization of Petroleum Exporting Countries and its allies agreed to boost production in June. Energy markets were on edge even before OPEC announced the supply increase: U.S.-China trade had effectively come to a standstill after the countries increased tariff rates on each other’s goods to more than 100%, threatening to slow global growth and weigh on oil demand.

Prices began to rebound in mid-May after the U.S. and U.K. agreed to a trade deal framework, giving Wall Street confidence that tariff rates would eventually settle below the levels announced in April. Oil’s rebound picked up pace in early June when OPEC lifted its production targets by less than investors expected.