Oil prices rose on concerns stemming from tensions between the US and Iran
Investors saw a slight increase in oil prices on Thursday morning, worried about escalating tensions between the US and Iran. Fears that any attack on Tehran or on shipping vessels passing through the Strait of Hormuz could disrupt supply supported the price increase.
Brent and WTI rose approximately 0.4%. Brent crude futures rose 27 cents, or 0.39%, to $69.67 a barrel at 03:50 GMT. WTI crude rose 29 cents, or 0.45%, to $64.92.
Both benchmarks closed higher on Wednesday. Brent futures rose 0.87%, while WTI rose more than 1.05%. Increased US crude oil inventories overshadowed investor concerns about US-Iran tensions.
Trump said talks with Tehran would continue. Following Trump's talks with Netanyahu, no definitive decision has been reached on how to proceed with Iran, but he remains insistent on continuing negotiations with Tehran.
On Tuesday, Trump said he was considering sending a second aircraft carrier to the Middle East if no agreement is reached with Iran, even as Washington and Tehran prepare to resume talks.
US and Iranian diplomats held indirect talks in Oman last week. The date and location of the next round of US-Iran talks have not yet been announced.
A sustained break above $65-66 in WTI requires further escalation in the Middle East, while a decrease in tensions could trigger a rapid profit-taking move towards $60-61 in WTI.
According to the US Department of Labor, job growth unexpectedly accelerated in the US in January, and the unemployment rate fell to 4.3%, indicating a healthy economy. The resilient US economy also supports expectations for oil demand.
A significant increase in US crude oil inventories has limited price increases. According to the Energy Information Administration (EIA), US crude oil inventories rose by 8.5 million barrels last week to 428.8 million barrels, far exceeding analysts' expectations of a 793,000-barrel increase.
However, global oil inventory increases since the beginning of the year have generally been below expectations, and net long positions in non-US crude oil futures and options have not yet reached excessively weighted levels.
Therefore, oil prices are likely to continue their upward trend due to the US-Iran situation, tightened sanctions on Russian oil, and expectations of reduced exports.
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