On a Thursday morning in late January, oil markets carried a familiar human unease into their trading: the fear that a distant confrontation might interrupt the flow of energy on which so much of the world depends. Brent and West Texas Intermediate climbed for a third straight day, reaching their highest levels since late September, as Washington's pressure on Iran over its nuclear programme grew louder and a naval force moved into the region. Traders were pricing not only the barrels already in the market but the possibility that a military strike could cut supply from one of OPEC's major pro
Oil Climbs Third Straight Day as Iran Strike Fears Lift Brent to $68.90
The potential for Iran getting hit has raised oil's geopolitical premium by $3 to $4
Mark
Oil is up three days running. What is actually driving it?
Mimi
Mostly fear of a U.S. strike on Iran. Trump has threatened military action over Tehran's nuclear programme, and a U.S. naval group has arrived in the region.
Mark
How big is Iran in the oil picture?
Mimi
It's the fourth-largest OPEC producer, at 3.2 million barrels a day. Disruption there would matter.
Luke
But nothing has been disrupted yet. This is a price for a possibility, not for lost barrels.
Mark
Is there a number on that possibility?
Mimi
Citi says the risk adds $3 to $4 a barrel, and that Brent could reach $72 if things escalate further.
Luke
Worth remembering that's one bank's estimate, not a measured fact. And the report on Trump weighing attacks on Iranian security forces and leaders rests on unnamed U.S. sources.
Mark
Was there anything else pushing prices up?
Mimi
Yes, U.S. crude stocks fell 2.3 million barrels to 423.8 million, when analysts had expected a 1.8 million rise.
Luke
Which means the rally has two causes, and the source doesn't say how much each contributes. That split is unknown.
Mark
So what matters next?
Mimi
Whether a strike happens, plus Russian oil restrictions and Chinese buying, which Citi says could keep prices elevated.
Le Pouls
- Brent crude hit about $68.90 and WTI about $63.79, both climbing roughly 5% in three days as traders braced for trouble.
- Washington's threats against Tehran and the arrival of a US naval group have turned a nuclear dispute into a live supply risk.
- Reports that Trump is weighing strikes on Iranian security forces and leaders have sharpened fears of a sudden regime crisis.
- Citi estimates a $3 to $4 per barrel geopolitical premium, with Brent possibly reaching $72 if tensions escalate.
- A surprise drop of 2.3 million barrels in US crude stocks has tightened the near-term balance and added fuel to the rally.
- Prices may stay elevated as US curbs on Russian oil and steady Chinese buying erode the oversupply markets expected this year.
On a Thursday morning in late January, oil markets carried a familiar human unease into their trading: the fear that a distant confrontation might interrupt the flow of energy on which so much of the world depends. Brent and West Texas Intermediate climbed for a third straight day, reaching their highest levels since late September, as Washington's pressure on Iran over its nuclear programme grew louder and a naval force moved into the region. Traders were pricing not only the barrels already in the market but the possibility that a military strike could cut supply from one of OPEC's major producers. It is a reminder that in an interconnected economy, a threat spoken in one capital can be felt in the cost of fuel everywhere.
Early on Thursday, January 29, Brent crude futures stood at $68.90 a barrel and West Texas Intermediate at $63.79. It was the third straight daily gain, and the reason was not a shortage in the market today but a fear of what might happen in the Middle East tomorrow. Both benchmarks had risen about 5% since January 26, reaching their highest levels since September 29.
The unease centres on Iran, the fourth-largest producer in OPEC, pumping around 3.2 million barrels a day. President Donald Trump has pressed Tehran to end its nuclear programme and backed that demand with threats of military strikes, while a US naval group has arrived in the region. Reuters, citing US sources, reported that Trump is considering options to attack Iranian security forces and leaders, with the aim of sparking protests that could topple the government. For traders, any military action could cut supply from the region, and so the risk is being priced in before anything has happened.
Citi analysts estimated that this risk adds $3 to $4 a barrel in geopolitical premium, and that Brent could reach $72 if tensions rise further. Supply was also tightening at home. US crude inventories unexpectedly fell by 2.3 million barrels in the week ended January 23, when analysts had expected a rise, a sign that refinery demand was drawing down a thin market.
Citi's wider view is that prices may remain high. Beyond Iran, it pointed to US restrictions on Russian oil purchases and continued Chinese buying, a shift from markets that had entered the year expecting a large glut. What comes next depends on whether Washington turns its threats into action, how resilient Iranian output proves, and whether the squeeze on Russian supply deepens.
By 0216 GMT on Thursday, January 29, Brent crude futures stood at $68.90 a barrel, up 50 cents, or 0.73%. U.S. West Texas Intermediate had gained 58 cents, or 0.92%, to $63.79. It was the third consecutive daily rise for oil, and the cause was the growing possibility that the United States will attack Iran.
Both benchmarks have climbed about 5% since January 26 and now sit at their highest levels since September 29. The move reflects what traders are weighing: Iran is a key Middle Eastern producer, and any military action could disrupt supply from the region.
The pressure on Tehran has been building. U.S. President Donald Trump has stepped up demands that Iran end its nuclear programme, backing them with threats of military strikes, and a U.S. naval group has arrived in the region. Iran is the fourth-largest producer in the Organization of the Petroleum Exporting Countries, with output of 3.2 million barrels per day.
Reuters reported on Thursday, citing U.S. sources familiar with the discussions, that Trump is considering options to attack Iranian security forces and leaders. The aim under discussion would be to inspire protests that could potentially topple the current regime.
Analysts at Citi put a number on the risk in a note on Wednesday. They said the prospect of Iran being hit has raised the geopolitical premium in oil prices by potentially $3 to $4 a barrel. If tensions escalate further, they added, Brent could climb as high as $72.
Geopolitics was not the only support. The U.S. Energy Information Administration reported on Wednesday that American crude inventories fell by 2.3 million barrels to 423.8 million barrels in the week ended January 23. Analysts polled by Reuters had expected a 1.8 million-barrel increase, so the draw was a surprise. Linh Tran, a market analyst at XS.com, said it suggests the short-term supply-demand balance has tightened, reflecting steady refinery demand and constrained barrels available to the market.
Citi's broader view is that prices may stay elevated. Besides the Iran risk, it cited U.S. restrictions on Russian oil purchases and continued buying by China. That would be a notable shift, since markets entered the year expecting a large oversupply.
What to watch now is whether Washington follows its threats with action against Iran, how Iranian output holds up, and whether the restrictions on Russian oil keep tightening the market.
Citations marquantes
Iran getting hit has escalated the geopolitical premium of oil prices by potentially $3 to $4 per barrel.— Citi analysts, note on Wednesday
The short-term supply-demand balance has tightened, reflecting steady refinery demand and constrained barrels available to the market.— Linh Tran, market analyst at XS.com
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