Global oil prices extended their rally on June 3, reaching fresh one-week highs as renewed military tensions in the Middle East and stalled diplomatic efforts between Iran and the US heightened concerns over global energy supplies.

Brent crude rose 0.8% to $96.81 per barrel, while U.S. West Texas Intermediate (WTI) gained 1.0% to $94.67, building on strong gains from the previous session, The Caspian Post reports via Reuters.

The latest surge follows reports of missile launches by Iran toward Kuwait and Bahrain, further escalating regional instability. The US responded with strikes on Iran’s Qeshm Island, adding to fears that the conflict could threaten critical energy infrastructure and shipping routes.

Markets are also reacting to growing uncertainty surrounding negotiations between Washington and Tehran. Despite ongoing discussions aimed at reducing tensions, both sides have reported limited progress, leaving investors concerned about the risk of further escalation.

Adding to bullish sentiment, the International Energy Agency (IEA) warned that global oil inventories could fall to critically low levels ahead of the peak summer demand season if current stock drawdowns continue.

Supply concerns were reinforced by data showing U.S. crude inventories declined for a seventh consecutive week, with stockpiles reportedly dropping by 6.8 million barrels in the week ending May 29.

Attention is now focused on developments in the Middle East, the future of Iran-U.S. negotiations, and the security of the Strait of Hormuz - a vital artery for global oil exports. Any further disruption in the region could push crude prices even higher in the coming weeks.