Oil Rises Again: US-Iran Tensions Heat Up, US Stockpiles Plunge Sharply
Oil prices rose for a second straight day after geopolitical tensions resurfaced, following reports that the US shot down an Iranian drone near a US aircraft carrier in the Arabian Sea. This incident has reasserted the geopolitical risk premium in the market, as the risk of Middle East supply disruptions increases.
Brent crude futures rose to $68 per barrel after rising 1.6% on Tuesday, while WTI hovered around $64. The incident initially "shocked" the market, but Donald Trump insisted both sides were maintaining diplomatic channels. White House spokeswoman Karoline Leavitt also stated that US-Iran negotiations are still scheduled for Friday.
On the supply side, oil prices were also supported by inventory data. The American Petroleum Institute reported that US crude oil stocks fell by 11.1 million barrels last week. If confirmed by official data due to be released Wednesday, this could potentially be the largest stockpile decline since June—a sign that US domestic supplies are tightening.
Tensions are also evident in the world's most crucial energy routes. A US-flagged tanker was reportedly "approached" by an Iranian vessel while transiting the Strait of Hormuz, a vital route for global oil trade. The US military said Iran's Islamic Revolutionary Guard Corps (IRGC) "disrupted" the Stena Imperative tanker, which is linked to the US military's fuel procurement program, according to the United States Central Command.
Energy analyst Saul Kavonic of MST Marquee believes the drone and tanker incidents serve as a reminder that the situation could escalate unintentionally. He estimates the market is adding a geopolitical risk premium of around $5–$10 per barrel, primarily due to concerns about potential further US military action against Iran.
Concerns about conflict in the Middle East are increasingly sensitive, as the region accounts for about a third of global oil supply. Although the market saw signs of increasing oversupply, geopolitical concerns last month continued to support oil prices. Oil has also been affected by broader commodity volatility—with gold and silver falling sharply before rebounding.
Meanwhile, OPEC+ still sees global demand gradually improving starting in March or April, according to Russian Deputy Prime Minister Alexander Novak. The producer group is scheduled to decide on March 1 whether to resume monthly production increases after a pause in the first quarter.
In Singapore trading, Brent crude for April rose 0.7% to $67.77 per barrel, while WTI crude for March rose 0.8% to $63.72 per barrel.
Source: Newsmaker.id
