Oil prices extend gains on concerns of potential US-Iran conflict

Oil prices rose on Thursday as the U.S. and Iran attempted to ease a standoff in talks over Tehran’s nuclear programme while both sides heightened military activity in the key oil-producing region. Brent futures climbed 23 cents, or 0.3% to $70.58 a barrel by 0735 GMT, while U.S.

West Texas Intermediate (WTI) crude gained 25 cents, or 0.4%, to trade at $65.44 a barrel. Both benchmarks settled more than 4% higher on Wednesday, posting their highest settlements since January 30, as traders priced in the risk of supply disruptions in the event of a conflict. “Oil prices are rallying as the market becomes increasingly concerned over the potential for imminent U.S.

action against Iran,” said ING analysts in a Thursday note. “For oil markets, the concern is clearly what action would mean not only for Iranian oil supply, but also broader Persian Gulf oil flows, given the risk of disruption to shipments through the Strait of Hormuz.” Iranian state media reported the country had shut down the Strait of Hormuz for a few hours on Tuesday, without making clear whether the waterway had fully reopened. About 20% of the world’s oil supply passes through the waterway.

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“Tensions between Washington and Tehran remain high, but the prevailing view is that full-scale armed conflict is unlikely, prompting a wait-and-see approach,” said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities. President Donald Trump does not want a sharp rise in crude prices, and even if military action occurs, it would likely be limited to short-term air strikes,” Kikukawa added. A degree of progress was made during Iran talks in Geneva this week but distance remained on some issues, the White House said on Wednesday, adding that it expected Tehran to come back with more details in a couple of weeks.

At the same time, the U.S. has deployed warships near Iran, with U.S. Vice President JD Vance saying Washington was weighing whether to continue diplomatic engagement with Tehran or pursue “another option”. Meanwhile, two days of peace talks in Geneva between Ukraine and Russia ended on Wednesday without a breakthrough, with Ukrainian President Volodymyr Zelenskiy accusing Moscow of stalling U.S.-mediated efforts to end the four-year-old war.

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