Oil prices rose by more than 1.5% in Asian trading on Thursday, marking the third straight day of gains, as increasing speculation regarding potential U.S. military action against Iran fueled supply disruption fears in the Middle East. Brent crude futures settled at $69.39 a barrel, while U.S. West Texas Intermediate crude climbed to $64.27 a barrel by 0436 GMT, according to reports.
Both major benchmarks have now appreciated approximately 5% since Monday, reaching their highest levels since late September. The upward pressure correlates directly with heightened rhetoric from U.S. President Donald Trump concerning Iran's nuclear program and the recent deployment of a U.S. naval group to the region.
Reuters reported on Thursday, citing U.S. sources familiar with internal discussions, that the administration is considering options targeting Iranian security forces and leadership to foment domestic protests. Iran, the fourth-largest producer within OPEC, currently supplies about 3.2 million barrels per day, making any disruption highly significant for global supply.
Despite the Federal Reserve maintaining interest rates steady on Wednesday amid a robust U.S. economic outlook, oil prices demonstrated resilience. Priyanka Sachdeva, a senior market analyst at Phillip Nova, noted that escalating U.S.-Iran tensions continued to underpin the supply-risk narrative.
Furthermore, prices received support from domestic factors, including weather-related production outages in certain U.S. regions. Sachdeva also pointed to a surprise decline in U.S. crude inventories, which temporarily alleviated concerns regarding excess supply in the world's largest consuming nation.
Data from the Energy Information Administration confirmed this inventory drawdown, showing U.S. crude stockpiles fell by 2.3 million barrels for the week ending January 23. This decline contrasted with analyst expectations polled by Reuters, which had forecasted a build of 1.8 million barrels.
Analysts suggest that the current pricing already incorporates a notable geopolitical premium. Citi analysts estimated in a note on Wednesday that the potential for military engagement in Iran has added between $3 and $4 per barrel to oil prices, warning that further escalation could push Brent towards $72 a barrel.
