Oil prices retreated about 2 per cent on Wednesday, extending the previous day's declines after Saudi Arabia said it would quickly restore full production following last weekend's attacks on its facilities and as US crude stockpiles rose unexpectedly.

Tension in the Middle East remained elevated, however, after the Saudi defence ministry held a news conference, displaying drone and missile debris it said was “undeniable” evidence of Iranian aggression.

US president Donald Trump on Wednesday said he had ordered a major increase in sanctions on Iran in the latest US move to pressure Tehran. Iran has denied involvement in the strikes. The United States wants to build a coalition of European and Arab partners to deter Iran after the attack on Saudi Arabia that US secretary of state Mike Pompeo described on Wednesday as "an act of war".

Brent crude oil futures ended the session down 95 cents, or 1.5 per cent, at $63.60 a barrel while US West Texas Intermediate crude futures settled $1.23, or 2.1 per cent lower, at $58.11. US crude stockpiles rose by 1.1 million barrels last week, Energy Information Administration data showed, compared with analysts’ expectations for a decrease of 2.5 million barrels. – Reuters