US and Iran Increase Military Activity in Key Oil-Producing Region, Conflict Fears Drive Up Oil Prices
While efforts are underway to ease tensions in talks on Tehran's nuclear program, the US and Iran have increased military activity in the key oil-producing region. This has driven oil prices higher in Asian markets on Thursday.
Analysts say the market is in a 'wait-and-see' mode as tensions remain high.
Brent futures rose 24 cents, or 0.3%, to $70.59 a barrel as of 04:15 GMT, while WTI rose 28 cents, or 0.4%, to trade at $65.47 a barrel.
Both indicators rose more than 4% on Wednesday, reaching their highest closing levels since January 30, as concerns about a potential US-Iran conflict priced in potential supply disruptions.
The biggest concern for the oil market is what will happen if escalating tensions disrupt shipping through the Strait of Hormuz. Because approximately 20% of the world's oil consumption passes through this waterway.
Tensions between Washington and Tehran remain high, but the prevailing view is that a full-scale armed conflict is unlikely, necessitating a wait-and-see approach.
Trump does not want a sharp increase in crude oil prices, and even if there is military intervention, it will likely be limited to short-term airstrikes.
The White House said Wednesday that some progress had been made in talks with Iran in Geneva this week, but that distance remained between them on some issues, adding that Tehran is expected to return with more details in a few weeks.
Meanwhile, two days of peace talks between Ukraine and Russia in Geneva ended on Wednesday without a breakthrough. Zelenskyy accused Moscow of obstructing US-brokered efforts to end the four-year war.
According to industry data, US crude oil and fuel inventories fell last week.
Market sources said on Wednesday, citing figures from the American Petroleum Institute (API), that U.S. crude oil, gasoline, and distillate fuel inventories fell last week. This contradicted analysts' expectations that crude oil inventories would increase by 2.1 million barrels in the week ending February 13.
Official U.S. oil inventory reports from the Energy Information Administration (EIA) will be released on Thursday.
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