Oil prices rose for a third day on Thursday on increasing concerns the U.S. may carry out a military attack on key Middle Eastern producer Iran that could disrupt supply from the region.
Brent crude futures rose 50 cents, or 0.73%, to $68.9 a barrel by 0216 GMT, but U.S. West Texas Intermediate crude climbed 58 cents, or 0.92%, to $63.79 a barrel.
Both contracts have climbed about 5% from January 26 and are at their highest since September 29.
Prices are rising as U.S. President Donald Trump has increased pressure on Iran to end its nuclear programme with threats of military strikes and as a U.S. naval group has arrived in the region. Iran is the fourth-largest producer among the Organization of the Petroleum Exporting Countries with output of 3.2 million barrels per day.
Trump is considering options to attack Iranian security forces and leaders to inspire protests to potentially topple the current regime, Reuters reported on Thursday, citing U.S. sources familiar with the discussions.
“The potential for Iran getting hit has escalated the geopolitical premium of oil prices by potentially $3 to $4 (per barrel),” analysts at Citi said in a note on Wednesday. They added that further geopolitical escalation could push prices to as high as $72 a barrel for Brent.
An unexpected drop in crude stockpiles in the U.S., the world’s biggest oil consumer, also supported prices.
U.S. crude inventories fell by 2.3 million barrels to 423.8 million barrels in the week ended January 23, the Energy Information Administration said on Wednesday, compared with analysts’ expectations in a Reuters poll for a 1.8 million-barrel rise.
“This development suggests that the short-term supply–demand balance has tightened, reflecting steady refinery demand and constrained barrels available to the market,” said Linh Tran, a market analyst at XS.com.
Overall, Citi said oil prices may stay elevated due to rising geopolitical risks, U.S. restrictions on Russian oil purchases and continued Chinese buying, even as markets entered the year expecting a large oversupply.
(Reporting by Sam Li and Trxie Yap; Editing by Christian Schmollinger)