Oil Rises as Iran Risks Overpower Stockpiles
Oil prices continued their rally for a second day, as market participants focused more on US-Iran tensions than on signs of bulging supply. Geopolitical risks have again entered the picture, creating a premium on prices, tilting market sentiment toward the defensive, even as supply data suggests caution.
In early Asian trading, Brent crude oil prices hovered near US$70 per barrel, while WTI hovered around US$65. The market weighed several reports related to Iran—from the potential for more aggressive enforcement measures against Iranian oil flows to the possibility of increased US military strength in the region if nuclear negotiations fail to reach a consensus.
On the supply side, the United States has signaled a tighter supply. US crude oil inventories rose sharply by 8.5 million barrels last week, the highest since June, according to official EIA data—a figure that typically puts downward pressure on prices because it indicates a supply glut. However, this time, headline risks from the Middle East have been more dominant, offsetting the pressure.
The market is also awaiting the International Energy Agency's (IEA) monthly report, which could again highlight the risk of a global surplus this year—a narrative that has frequently emerged recently from several major banks. In other words, supply fundamentals still have the potential to act as a brake, but for now, price direction is largely driven by geopolitics and the perceived risk of shipping disruptions.
Meanwhile, attention is also focused on Venezuela. Statements by US energy officials alleging that China had previously purchased Venezuelan oil from the US underscore how oil flows and energy policy are increasingly intertwined with geopolitical dynamics.
In terms of market structure, Brent's prompt spread remains in a backwardation pattern (the price of the nearest contract is higher than the next), a sign that near-term conditions remain relatively tight despite looming stock and surplus issues.
Brent for April settlement rose 0.3% to US$69.60 per barrel at 10:47 a.m. Singapore time, while WTI for March delivery strengthened 0.4% to US$64.86.
Source: Newsmaker.id
