LONDON: Oil prices rose on Thursday, driven by increasing concerns over potential military conflict between the United States and Iran as both countries stepped up military activity in the oil-producing region.
Brent futures were up $1.09, or 1.55%, at $71.44 a barrel by 1247 GMT while U.S. West Texas Intermediate (WTI) crude also gained $1.09, or 1.7%, to $66.28.
Both benchmarks neared six-month highs on Thursday after advancing more than 4% on Wednesday as traders priced in the risk of supply disruptions in the event of conflict.
The latest rise in oil prices signals a market strengthening an already notable geopolitical risk premium as the world’s most important oil artery again sits within striking distance of conflict, said Saxo Bank analyst Ole Hansen.
About 20% of global oil supply passes through the Strait of Hormuz.
Iranian state media reported that the country shut down the Strait of Hormuz for a few hours on Tuesday without making clear whether the waterway had reopened fully.
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Oil prices have further room to rally if the perceived likelihood of strikes on Iran intensifies, said Energy Aspects analyst Richard Jones, adding that some traders abandoned expectations of an imminent deal with Iran and were instead pricing in heightened risk of imminent military action.
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.
Iran issued a notice to airmen (NOTAM) that it plans rocket launches in areas across the south of the country on Thursday from 0330 GMT to 1330 GMT, according to the U.S. Federal Aviation Administration website.
At the same time, the U.S. has deployed warships near Iran, with U.S. Vice President JD Vance saying that Washington was considering whether it should 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.
U.S. crude and gasoline and distillate inventories fell last week, market sources said, citing American Petroleum Institute figures on Wednesday. That was contrary to expectations in a Reuters poll that crude stocks would rise by 2.1 million barrels in the week to February 13.
Official U.S. oil inventory reports from the Energy Information Administration are due on Thursday.
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