Crude oil price jumps 17% from four-year lows; here's why

Energy prices are back in action after crude oil prices spiked more than 6% on Wednesday. The sharp rise in crude oil prices is second second-largest single-day gain in the past few months. Crude price have remained under pressure over the past six to eight months owing to eased geopolitical tensions and rising trade war conflicts. However, as the situation continued to ease on tariff front, the prices started to gain traction. After falling to nearly 5-year low levels on 05 May, 2025, the prices have now gained nearly 18% from the 52-week low levels.

Here are the top contributing factors to rise in oil price

Easing trade war tensions

Post the April 2 Tariff annoucement the global trade saw a sharp drop in activity. Cargo bookings dropped 60% and 30% of new shipments stood cancelled from China. Consequently, the crude oil prices too dropped from the higher levels due to poor demand. However, easing trade war tensions now bring hope for crude oil demand thereby eased some pressure on crude oil prices.

Geopolitical tensions stare back

Middle-east region, which is hot bed for conflicts once again has witnessed an serious impending conflict between Iran and Israel and the US. According to the media reports, Israel is preparing for direct conflict with Iran with respect to its Nuclear facilities program. President Donald Trump said, he is now less confident on signing a nuclear deal with Iran, eroding further hopes of de-escalation in the region. The elevated geo-political risks could disrupt the supply from the region also contributed to sharp spike in the oil prices.

Falling crude oil inventories

The crude oil stock piles for the week ended June 6 also fell by 3.6 million barrels more than the forecast of 2 million barrels decline. This signaled strong demand and improving economic conditions in the region. In addition, softer than expected inflation print reinforced the expectations for early rate cuts in the US which could further aid for higher oil prices due to rising oil demand.