LONDON, July 9: Oil prices recovered some lost ground on Wednesday on fresh fears about possible supply disruptions after crude producer Iran tested a long-range missile capable of hitting Israel, analysts said.

A day after oil prices slumped more than $5, the market was also digesting a pledge by world leaders at their G8 summit in Japan to make the crude market more transparent.

New York’s main oil contract, light sweet crude for August delivery, rose $1.35 to $137.29 per barrel. London’s Brent North Sea oil for August gained 65 cents to $137.08.

Prices rose further on Wednesday after the US Department of Energy (DoE) said that American crude reserves fell 5.9 million barrels in the week to July 4. That beat market expectations for a drop of 2.1 million barrels.

“Oil futures bounced back up (on Wednesday), with investors buying on the dips after a sharp sell-off on Tuesday,” said Sucden analyst Andrey Kryuchenkov.

“Tensions in the Middle East were back in investor focus, supporting crude prices.” Oil producer Iran on Wednesday test-fired a missile it said is capable of reaching Israel, angering the United States amid growing fears that the standoff over the contested Iranian nuclear drive could lead to war.

Oil prices had nosedived on Tuesday as falling global equities and resurgent concerns about an economic slowdown stoked fears about future energy demand.Group of Eight leaders pledged on Wednesday to improve transparency and the supply and demand balance in the oil market by boosting dialogue between producing and consuming nations.

“In response to the sharp rise in oil prices, we agreed to improve balance in supply and demand through efforts and dialogue by both producing and consuming countries to improve transparency,” they said in a final statement following their summit in Japan.

A week ago, oil prices jumped to record highs of almost $147, further igniting worries about inflation and a global economic slowdown.

Meanwhile, Anglo-Dutch oil giant Shell said on Wednesday that it has lifted its force majeure provision on production of 225,000 barrels per day from its offshore Bonga oilfield in Nigeria.—AFP