Oil prices rose as much as 3% Wednesday before paring gains amid worries of supply disruptions stemming from the Middle East conflict.

Prices fell from session highs by mid-day in the trading session after Russia signaled oil alliance OPEC+ would follow through with plans to add supply to the market in December. US government data also showed an unexpected rise in inventories last week.

West Texas Intermediate (CL=F) gained less than 1% to settle at $70.10 per barrel. Brent (BZ=F), the international benchmark price, also gained to settle at $73.90 per barrel.

The moves on Wednesday follow a brief 5% spike during the prior session after Iran fired about 200 ballistic missiles in response to Israeli ground raids in southern Lebanon targeting Iranian-backed militants.

"Crude trading sharply higher as major short covering by funds continues on the heels of rising Geopolitical issues with Israel now vowing to strike back on Iran," Dennis Kissler, senior vice president of trading at BOK Financial, said in a note to clients on Wednesday.

Israeli officials said a retaliation could include targeting Iranian oil production facilities, according to an Axios report. Iran produces roughly 3 million barrels of oil per day.

Investors are also concerned with disruption risks stemming from "potential additional declines in Red Sea oil flows," noted Goldman Sachs analysts on Wednesday. The waterway between Africa and the Arabian Peninsula has been a hot spot for rebel attacks this year in response to the Israel-Hamas war.

Crude futures pared session gains after the latest government data released Wednesday showed US inventories unexpectedly rose last week.

Prices also reacted to comments from Russian Deputy Prime Minister Alexander Novak signaling oil alliance OPEC+ would continue forward with its plan to start raising output starting in December.

Last week, the futures market slumped following a report that the oil alliance leader Saudi Arabia is determined to start unwinding voluntary production cuts later this year, even if it leads to lower crude prices.

The Organization of the Petroleum Exporting Countries and its production allies have been cutting output since 2022. Despite the group's pledges, some members have produced above their quotas this year.

"The market had sold down over the past few months as it became clear, very clear, that OPEC+ members were cheating on their quotas," Ed Hirs, senior fellow at the University of Houston, told Yahoo Finance on Wednesday.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.

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