Oil prices rose 1.5% as the US threat of an attack on Iran intensified
Oil prices rose more than 1.5% in Asian markets on Thursday, extending their gains for a third consecutive day, as concerns grew that a US military attack on major Middle Eastern oil producer Iran could disrupt supplies from the region.
Brent crude futures rose 99 cents, or 1.5%, to $69.39 a barrel as of 04:36 GMT. WTI crude rose $1.06, or 1.7%, to $64.27 a barrel.
Both contracts have risen roughly 5% since Monday, reaching their highest levels since September 29.
Iran is the fourth-largest producer among the Organization of Petroleum Exporting Countries (OPEC) members, with a daily output of 3.2 million barrels.
Prices are rising as Trump increased pressure on Iran with a military attack threat, sending a US naval group to the region.
Trump is considering options to attack Iranian security forces and leaders to incite protests to overthrow the current regime.
Meanwhile, despite the Fed holding interest rates steady and a slight rebound in the US Dollar Index, oil prices remained resilient as escalating US-Iran tensions continued to support the supply risk narrative.
Amid signs of a healthy US economy, the Federal Reserve held interest rates steady on Wednesday. Lower interest rates generally make it cheaper for consumers to buy oil, stimulating demand and supporting prices.
Prices also found support from weather-related production losses in some parts of the US and an unexpected drop in US crude oil inventories, temporarily easing concerns about oversupply.
According to the Energy Information Administration (EIA) on Wednesday, U.S. crude oil inventories fell by 2.3 million barrels to 423.8 million barrels in the week ending January 23. This is in contrast to analysts' expectations of a 1.8 million barrel increase.
Some analysts had predicted higher prices for the next few months due to geopolitical risk premiums.
The possibility of a strike on Iran increases the geopolitical premium on oil prices by $3 to $4 (per barrel). Further escalation of geopolitical tensions could push Brent oil over $70 per barrel.
Related Articles
Oil prices are rising as supply concerns increase amid expectations of a prolonged conflict in the Middle East
Oil prices continued to rise following US and Iranian attacks on ships serving their respective purposes
Oil prices closed higher this week following renewed US-Iran hostilities
