Oil Prices Hold Above $70 Per Barrel Amid Iran War Concerns
Oil prices stabilized on Thursday after recording their biggest daily gain since October, as rising geopolitical tensions surrounding Iran fueled fresh supply concerns across global energy markets.
Brent crude held above the $70 per barrel level after surging 4.3% on Wednesday, while West Texas Intermediate (WTI) crude traded above $65 per barrel. The gains followed reports suggesting that a potential U.S. military intervention in Iran could occur sooner than previously anticipated.
According to Axios, any possible U.S. military action could evolve into a multi-week campaign, with Israel reportedly advocating for a strategy aimed at regime change in Iran. Such developments have intensified fears of supply disruptions from the Middle East, a region responsible for producing nearly one-third of the world’s oil supply.
Supply Risks and U.S. Political Considerations
A potential conflict in the region could threaten critical oil flows, placing upward pressure on crude prices. However, U.S. President Donald Trump faces political risks ahead of the upcoming midterm elections, as higher oil prices may translate into rising gasoline costs domestically, potentially impacting voter sentiment.
Meanwhile, nuclear negotiations between Washington and Tehran remain inconclusive. Iranian officials stated that a "general agreement" has been reached regarding the framework of a possible nuclear deal, while a U.S. official indicated that Iranian negotiators are expected to return to Geneva within two weeks with a revised proposal.
The United States has also imposed new visa restrictions on Iranian officials and executives in response to the government’s recent crackdown on protests.
Analysts at RBC Capital Markets, including Helima Croft, noted in a recent report that failure to resolve key disagreements could increase the likelihood of military confrontation.
Ukraine Developments and U.S. Oil Inventories
Beyond the Middle East, talks aimed at ending the war in Ukraine concluded in under 90 minutes without significant progress. Russia, a key member of the OPEC+ alliance, has reportedly slowed drilling activity, which may lead to further declines in oil output.
In the U.S., crude inventories fell by 609,000 barrels last week, according to data from the American Petroleum Institute. Official government figures are scheduled for release on Thursday.
In the latest trading session, Brent crude for April delivery rose 0.2% to $70.50 per barrel as of 1:40 p.m. Singapore time. March WTI futures, set to expire on Friday, climbed 0.3% to $65.38 per barrel, while the more actively traded April contract gained 0.3% to trade at $65.25 per barrel.
