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- WTI reaches four-month highs as US-Iran tensions heighten supply risk concerns.
- US warnings of possible military action over Iran’s nuclear deal raised supply disruption fears.
- WTI crude inventories fell 2.296 million barrels in the week ended January 24, after a 3.602 million-barrel build.
West Texas Intermediate (WTI) Oil prices extends its gains for the third successive session, trading around $64.00 per barrel during the early European hours on Thursday. WTI crude surged to four-month highs due to rising supply risks amid geopolitical tensions between the United States (US) and Iran.
The US warned of possible military action if Iran fails to secure a nuclear deal fueled fears of supply disruptions. US President Donald Trump said a substantial US naval force in the region is prepared to act “with speed and violence, if necessary,” heightening concerns that conflict could disrupt Middle East oil flows, which account for about one-third of global supply.
Markets also fear that Iranian retaliation could disrupt shipping through the Strait of Hormuz, a vital route for Oil and LNG. While Iran says it is open to talks, it has warned of an unprecedented response if provoked and is stepping up diplomacy with regional powers to avoid further escalation.
Oil prices rose after the US Energy Information Administration (EIA) reported that crude inventories fell by 2.296 million barrels in the week ended January 24, versus a 3.602 million-barrel build the prior week. The surprise drawdown signaled stronger Oil demand.
However, dollar-denominated crude prices may face headwinds as demand for the US Dollar (USD) rebounded after Treasury Secretary Scott Bessent reaffirmed the US commitment to a “strong dollar policy.” Bessent emphasized that robust US fundamentals and sound policy settings should continue to attract capital inflows, dismissing speculation about US intervention to sell dollars against the Japanese Yen.
