Oil prices rebounded sharply from their biggest three-day drop since 2020, as a fresh outbreak of conflict in the Middle East reminded markets that regional supply risks remain unresolved.

Brent crude settled near $91 a barrel, gaining approximately 8%. The month has seen extreme volatility in oil markets, with US-Iran relations oscillating between escalation and diplomatic efforts, only to erupt again in conflict.

President Donald Trump stated in a Fox News interview on Wednesday that Iran would face a severe strike following its attack on US forces stationed in Jordan. Earlier, Iran’s Islamic Revolution Guards Corps announced it had launched ballistic missiles targeting a US military airbase and a central command center, as reported by the Islamic Republic of Iran Broadcasting (IRIB).

Traders remain focused on diplomatic efforts to end the war and any signs that key transit routes remain unaffected. Liquidity in the market has also declined as the Brent crude front-month contract approaches expiry on Friday, amplifying price swings.

“We remain highly skeptical that we are close to a major diplomatic breakthrough that could resolve the nuclear impasse underlying this war,” wrote RBC Capital Markets analyst Helima Croft and her team in a note.

As hostilities between the US and Iran escalate once more, Washington imposed sanctions on two Iranian companies accused of charging ships for passage through the Strait of Hormuz.

West Texas Intermediate for September delivery rose 6.6% to settle at $84.46 a barrel. Brent for September delivery gained 7.9% to settle at $90.74 a barrel.