Iran Tensions Lift Oil Prices, Overshadowing Surplus Issues
Oil prices rose on Wednesday after Middle East tensions once again dominated market sentiment, overriding concerns about a potential oversupply. The primary focus was on the risk of escalation related to Iran—from talk of tightening sanctions enforcement to the possibility of a strengthened US military presence in the region, all of which added a “risk premium” to oil prices.
At the last price update, Brent was trading around $70.26 per barrel (+2.12%), marking a gain that brought Brent back above $70. Meanwhile, WTI also strengthened, hovering around $64.88 per barrel (+1.44%) at the latest update on Wednesday.
The market considered several headlines as key triggers, including reports that the US was considering more aggressive measures against Iranian oil shipments (e.g., potential action against tankers carrying Iran-linked cargo). At the same time, speculation also emerged about the option of deploying additional US naval forces to the region if nuclear diplomacy fails—reinforcing the risk of supply disruptions.
However, from a fundamental supply perspective, concerns about a surplus have not disappeared. Market participants are now awaiting official US oil inventory data (EIA) to confirm an industry report that US crude oil stocks jumped by 13.4 million barrels in the last week. If confirmed, this would be the largest increase in barrel counts since November 2023 and could potentially limit the rally if market focus shifts from geopolitics to stocks.
In addition to the EIA, the market is also closely monitoring OPEC's monthly report and an updated outlook from the International Energy Agency (IEA). The IEA previously highlighted the risk of a surplus if supply growth outpaces demand—a narrative that runs counter to today's geopolitical pressures. Therefore, oil prices are likely to remain volatile: Iran headlines could drive a quick surge, but stockpiles data and surplus projections could trigger a sudden correction. (alg)
Source: Newsmaker.id
