Oil prices climbed about 1.5% on Thursday, extending a three-day advance, as mounting concerns that the United States could launch a military strike against Iran heightened fears of potential supply disruptions from the Middle East.
Brent crude futures rose 94 cents, or 1.4%, to $69.34 a barrel by 07:30 GMT, while U.S. West Texas Intermediate gained 92 cents, or 1.5%, to $64.13 a barrel. Both benchmarks are now up roughly 5% since Monday and are trading at their highest levels since September 29.
The latest gains come as U.S. President Donald Trump has stepped up pressure on Iran to halt its nuclear programme, accompanied by renewed threats of military action and the arrival of a U.S. naval group in the region. Iran, the fourth-largest producer in OPEC, pumps around 3.2 million barrels per day, making any escalation a significant risk for global supply.
Trump is weighing options to strike Iranian security forces and senior leaders in an effort to encourage protests and potentially destabilise the current regime, Reuters reported on Thursday, citing U.S. sources familiar with the matter.
“The main driver of oil prices remains geopolitical risk premium surrounding Iran and the Middle East, though unplanned outages in Kazakhstan and U.S. (Winter Storm Fern) have had temporary impact as well,” DBS Bank’s energy sector team lead Suvro Sarkar said in an email.
In Kazakhstan, output at the giant Tengiz oilfield is being restored in stages after electrical fires curtailed production last week, with full capacity expected to be reached within about a week. In the United States, the world’s largest oil producer and top exporter of liquefied natural gas, operators have also been restarting crude and gas wells following severe cold weather linked to Winter Storm Fern over the weekend.
Oil prices were further supported by a surprise drawdown in U.S. crude stockpiles, which briefly eased concerns about oversupply, according to Phillip Nova senior market analyst Priyanka Sachdeva. Data from the Energy Information Administration showed U.S. crude inventories fell by 2.3 million barrels to 423.8 million barrels in the week ended January 23, compared with a Reuters poll that had forecast a 1.8 million-barrel increase.
Some analysts see scope for further upside if tensions around Iran intensify.
“The potential for Iran getting hit has escalated the geopolitical premium of oil prices by potentially $3 to $4 (per barrel),” analysts at Citi said in a note on Wednesday. They added that additional geopolitical escalation could lift Brent prices to as high as $72 a barrel over the next three months.