Oil prices advanced again on Thursday, as diplomatic efforts between Washington and Tehran unfolded alongside an uptick in military activity across the strategically vital Middle East energy corridor.
By 0735 GMT, Brent crude was up 23 cents, or 0.3%, at $70.58 per barrel, while U.S. West Texas Intermediate (WTI) gained 25 cents, or 0.4%, to $65.44 per barrel.
Both contracts had surged more than 4% in the previous session, marking their strongest closes since January 30, as traders factored in the possibility of supply disruptions should tensions escalate into open conflict.
“Oil prices are rallying as the market becomes increasingly concerned over the potential for imminent U.S. action against Iran,” ING analysts said in a note on Thursday.
“For oil markets, the concern is clearly what action would mean not only for Iranian oil supply, but also broader Persian Gulf oil flows, given the risk of disruption to shipments through the Strait of Hormuz.”
Iranian state media reported that the Strait of Hormuz had been temporarily closed for several hours on Tuesday, although it was unclear whether the key shipping lane had fully resumed operations. Roughly one-fifth of global oil supply transits the strait.
“Tensions between Washington and Tehran remain high, but the prevailing view is that full-scale armed conflict is unlikely, prompting a wait-and-see approach,” said Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, a unit of Nissan Securities.
“U.S. President Donald Trump does not want a sharp rise in crude prices, and even if military action occurs, it would likely be limited to short-term air strikes,” Kikukawa added.
The White House said Wednesday that some headway had been made in nuclear discussions in Geneva, though significant gaps remain. Officials indicated they expect Iran to return with additional details within weeks.
Iran also issued a notice to airmen (NOTAM) announcing planned rocket launches over southern regions on Thursday between 0330 GMT and 1330 GMT, according to the U.S. Federal Aviation Administration.
Meanwhile, the United States has positioned naval forces near Iran, with Vice President JD Vance stating that Washington was evaluating whether to persist with diplomatic engagement or consider “another option”.
Elsewhere, peace talks in Geneva between Ukraine and Russia concluded Wednesday without tangible progress. Ukrainian President Volodymyr Zelenskiy accused Moscow of obstructing U.S.-brokered efforts to end the four-year conflict.
On the supply front, industry data provided additional support for prices. According to market sources citing figures from the American Petroleum Institute, U.S. crude, gasoline and distillate inventories all declined last week. This contrasted with expectations from a Reuters survey that had forecast a 2.1 million-barrel increase in crude stocks for the week ending February 13.
Official inventory data from the U.S. Energy Information Administration is scheduled for release later on Thursday.