Oil prices paused on Thursday after surging to their biggest single-day gain in months, as escalating tensions involving Iran heightened fears of potential supply disruptions from one of the world’s most critical energy regions.
West Texas Intermediate (WTI) hovered near $65 a barrel after climbing 4.6% in the previous session, marking its strongest jump since October. Brent crude, the global benchmark, closed above $70 a barrel for the first time in over two weeks, reflecting renewed geopolitical risk premiums in oil markets.
The rally was triggered by reports suggesting the US could move closer to military involvement in Iran, raising concerns about a broader conflict. Any escalation threatens supplies from the Middle East, which accounts for roughly one-third of global oil production. Market participants remain wary that disruptions—whether from sanctions, infrastructure damage, or shipping risks—could tighten global crude availability.
Diplomatic Uncertainty Adds To Volatility
Despite heightened tensions, diplomatic channels remain open. Iran indicated there had been preliminary alignment with Washington on the framework of a potential nuclear agreement, while US officials signalled that further negotiations could take place in Geneva in the coming weeks. However, recent US visa restrictions targeting Iranian officials over domestic crackdowns have added to the strain in relations.
The geopolitical balancing act also carries domestic implications for Washington. Higher oil prices could translate into increased fuel costs for American consumers, posing a political challenge ahead of upcoming mid-term elections.
Supply Signals Offer Mixed Picture
Beyond the Middle East, other global developments are influencing oil’s trajectory. Efforts to reach a ceasefire in Ukraine ended inconclusively, prolonging uncertainty around Russian oil output. Russia, a key member of the OPEC+ alliance, has already seen signs of slowing production due to reduced drilling activity.
Meanwhile, US inventory data offered modest support to prices. Industry estimates showed crude stockpiles fell by about 609,000 barrels last week, suggesting steady demand. Official government figures due later Thursday could provide further direction.
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