Oil holds above $108 amid Middle East supply fears

Brent crude was 0.74 per cent higher at $108.04 a barrel on Wednesday, according to Mettis Global data, while West Texas Intermediate rose $1.73 to $104.71 per barrel by 10:25 am Pakistan time. Traders were also digesting a sharp build in US crude stocks, with Reuters citing American Petroleum Institute data showing a 7.1 million barrel gain in the week ended September 11. That increase far exceeded analysts' forecasts of a drop of about 1.6 million barrels.

Attention nevertheless stayed on the Middle East, where an Iranian strike forced a shutdown of Saudi Arabia's East-West pipeline over the weekend. US Energy Secretary Chris Wright told CNBC on Tuesday that the disruption should last only a few days. Andy Lipow of Lipow Oil Associates suggested in a Monday note that damaged infrastructure could mean repairs lasting months.

Financial costs of the conflict are also under the spotlight. According to a Congressional Budget Office report released Tuesday, the Pentagon has spent an estimated $38.1bn on the conflict through August 1. The report also projects an extra $2bn to $3bn for every additional month of conflict.