Oil prices held near their highest levels in six months, as escalating tensions between the US and Iran kept markets on edge and reinforced fears of potential supply disruptions from the Middle East.
West Texas Intermediate (WTI) hovered around $67 per barrel after climbing nearly 7% over the past two sessions, while Brent crude settled near $72. The rally gathered momentum after US President Donald Trump said Iran had a maximum of 10 to 15 days to reach an agreement over its nuclear program, signalling limited patience for prolonged negotiations.
Supply Disruption Concerns
Markets are closely watching the growing US military presence in the Middle East, which marks the largest buildup in the region since the 2003 Iraq war. The deployment has fuelled expectations that Washington may pursue either a broader military campaign or targeted strikes aimed at pressuring Tehran back to negotiations.
The key concern for oil markets remains the Strait of Hormuz, a strategic chokepoint through which a significant portion of global crude exports flows. Any disruption to shipments through the waterway could trigger a sharp spike in oil prices, given the region accounts for roughly one-third of global supply.
Analysts say while a prolonged disruption remains a risk scenario rather than a base case, markets are increasingly pricing in a geopolitical premium amid uncertainty.
Bullish Sentiment
Beyond geopolitical risks, supply fundamentals have also supported prices. US crude inventories fell by 9 million barrels last week, marking the sharpest decline since early September, according to government data. Stockpiles of refined products also dropped, indicating resilient demand.
Investor positioning reflects growing expectations of higher prices. Bullish options activity has surged, with traders increasingly buying contracts that benefit from further gains. Notably, Brent crude call options linked to prices as high as $100 per barrel saw significant trading volumes, highlighting hedging against extreme scenarios.
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