SINGAPORE: Oil prices rose 1.5% on Thursday, extending their gains for a third day in a row, as concerns grew that the United States could carry out a military strike against Iran, the Middle East’s main producer, disrupting supplies from the region.
Brent crude oil futures rose 94 cents, or 1.4%, to $69.34 a barrel by 7:30 p.m. Japan time. U.S. West Texas Intermediate crude rose 92 cents, or 1.5%, to $64.13 a barrel.
Both contracts are up about 5% since Monday and are at their highest since Sept. 29.
Prices have risen as US President Donald Trump ramps up pressure to halt Iran’s nuclear program by threatening military strikes and as US naval forces arrive in the region. Iran is the fourth largest producer in the Organization of the Petroleum Exporting Countries, producing 3.2 million barrels per day.
President Trump is considering the option of attacking Iranian security forces and leaders in a bid to stir up protests that could overthrow the current government, Reuters reported on Thursday, citing US sources familiar with the discussions.
“The main driver for oil prices remains the geopolitical risk premium around Iran and the Middle East, but unplanned power outages in Kazakhstan and the US (Winter Storm Fern) are also having a temporary impact,” Subro Sarkar, team leader for energy at DBS Bank, said in an email.
Kazakhstan’s giant Tengiz oil field is restarting in stages with the aim of reaching full production within a week after an electrical fire cut production last week.
In the U.S., the world’s biggest oil producer and top exporter of liquefied natural gas, oil and gas producers are bringing wells back online after disruptions from severe cold from Winter Storm Fern over the weekend.
Priyanka Sachdeva, senior market analyst at Philip Nova, said prices were also supported by an unexpected decline in U.S. crude inventories, temporarily easing concerns about oversupply.
U.S. crude oil inventories fell by 2.3 million barrels to 423.8 million barrels in the week ending Jan. 23, the Energy Information Administration said Wednesday, compared with a 1.8 million barrel increase expected by analysts polled by Reuters.
Some analysts expect prices to rise due to concerns about Iran.
“A potential blow to Iran could increase the geopolitical premium in oil prices by $3 to $4 (per barrel),” Citi analysts said in a note Wednesday.
They added that further geopolitical escalation could push Brent prices up to $72 per barrel over the next three months. (Reporting by Sam Li and Trixie Yap; Editing by Christian Schmollinger and Jamie Freed)
