Oil prices saw a slight increase on Wednesday after a slight dip earlier in the day, as concerns over the Iran-Israel conflict and potential U.S. involvement lingered in the market.

Brent crude rose by 28 cents to $76.73 a barrel by 1236 GMT, while U.S. West Texas Intermediate added 40 cents to $75.24. Both contracts had experienced a drop of over 1% earlier in the day.

The uptick follows a 4% surge on Tuesday, with traders closely monitoring the impact of potential supply disruptions as U.S. President Trump expresses growing frustration with Iran and calls for its “unconditional surrender.” However, Iran’s leader Ayatollah Ali Khamenei has rejected this demand.

Trump's statements have raised concerns about the possibility of increased U.S. involvement, including the option of targeting Iranian nuclear sites. This could escalate the conflict and pose a threat to energy infrastructure in the region, especially considering that almost one-third of global seaborne oil passes through the Strait of Hormuz, a critical chokepoint in times of conflict.

Iran, as OPEC's third-largest oil producer, currently produces around 3.3 million barrels per day. Iran's UN ambassador has warned that Tehran will respond if the U.S. joins Israel's campaign.

Market attention is also on the U.S. Federal Reserve, which is anticipated to maintain interest rates at a range of 4.25% to 4.50%. Some market participants are speculating about a potential rate cut in July if growth risks increase.

While lower interest rates could potentially boost oil demand, any spikes in prices due to conflict-related concerns may lead to new inflationary pressures.

According to data from the American Petroleum Institute, U.S. crude inventories have dropped by 10.1 million barrels for the week ending June 13. Official government data is expected to be released later on Wednesday.