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- WTI posts strong gains on Tuesday, supported by a rising geopolitical risk premium.
- Escalating tensions in Iran fuel concerns over potential disruptions to global Oil supply.
- Prospects of a resumption of Venezuelan Oil exports cap the upside.
West Texas Intermediate (WTI) US Oil trades around $60.80 per barrel on Tuesday, up 2.45% on the day, extending a four-day bullish move. The US Crude Oil benchmark has returned to its highest levels in two months, supported by a renewed surge in geopolitical tensions in the Middle East.
Oil markets remain focused on the situation in Iran, where intensifying domestic unrest and a tougher tone between Tehran, Washington and Tel Aviv are reviving fears of supply disruptions. Iran is one of the world’s major Crude Oil producers, and any threat to its production or export capacity is quickly priced into the market. Statements from US President Donald Trump, suggesting the imposition of an additional 25% tariff on countries doing business with Iran, have reinforced this risk premium, even if the actual impact of such measures on physical flows remains uncertain.
In this context, several analysts note that markets are currently more sensitive to geopolitical risks than to short-term fundamentals. According to analysts at Barclays, investor attention is firmly focused on regional instability and political rhetoric, against a backdrop of relatively resilient global demand.
However, expectations of a partial return of Venezuelan supply are helping to prevent a sharper rally in prices. According to Reuters, international commodity traders such as Trafigura and Vitol are expected to provide logistical support for the resumption of Venezuelan Oil exports at the request of the US government. The first vessel could be loaded as early as this week, adding supply to the international market.
Overall, the current balance in WTI reflects a tug of war between elevated geopolitical risks, which are keeping prices above $60.00, and expectations of additional supply that could temper bullish momentum. In the near term, Oil price dynamics are likely to remain closely tied to political developments surrounding Iran and to concrete signals regarding the restart of Venezuelan exports.
