Oil gained as tensions in the Middle East outweighed concerns that there is a supply glut building in the market.
West Texas Intermediate rose to settle above $64 after the Wall Street Journal said that the Pentagon has told a second aircraft carrier strike group to prepare to deploy to the Middle East, citing three US officials. That follows an earlier report from the news agency that the US is considering seizing tankers with Iranian crude.
“Oil right now, and just the rest of the commodity complex, is really dominated by three things: geopolitics, trade and technology,” Francisco Blanch, head of commodities research at Bank of America Global Research, said in a Bloomberg Television interview. “Certainly, right now, geopolitics are the main driving force pushing oil close to the high end of this year’s range.”
Iran is the fourth-largest OPEC producer, pumping an estimated 3.3 million barrels a day in January, according to a Bloomberg survey. Crude and condensate shipments totaled about 1.63 million barrels a day last month, vessel-tracking data show.
The WSJ report meant crude erased earlier losses after President Donald Trump said in a social media post that he insisted that talks with Iran continue in a meeting with Israeli Prime Minister Benjamin Netanyahu. It was widely expected that Netanyahu would push for a broad curtailment of the Islamic Republic’s military activities in the region.
The commodity has also received support earlier after strong US jobs data brightened the outlook for the world’s largest economy.
“A resilient labor market underpins demand for transport fuels, petrochemicals and power generation, reducing downside risks to US consumption at a time when macro sentiment had turned cautious,” said Claudio Galimberti, chief economist at Rystad Energy. The strong numbers are a sign that the demand picture is firming up, he added.
Crude has advanced almost 13% this year as geopolitical tensions added a risk premium to prices, following a 20% slump in 2025 on concern supplies will outpace demand. After the US and Iran said initial talks last week to seek a deal on Iran’s nuclear program were positive, traders fear failure to reach an agreement may lead to US strikes and potential supply interruptions.
Oil Prices
WTI for March delivery added 1.1% to settle at $64.63 a barrel in New York.
Brent for April settlement gained 0.9% to settle at $69.40 a barrel.
Traders are also watching for the monthly report from the International Energy Agency on Thursday. The IEA has been warning that there will be a major crude supply surplus this year.
“The market is oversupplied and inventories are rising,” Bank of America’s Blanch said. There is oversupply of roughly 2 million barrels a day in the market as the OPEC+ producers group has added output, he said. Should geopolitics push Brent above $70 a barrel, he expects the group will add even more.
Meanwhile, US crude stockpiles rose by 8.5 million barrels, the biggest surge since January 2025 in barrel terms, figures from the Energy Information Administration show, but that volume was lower than the expected gain of 13.4 million barrels flagged by an industry group a day prior. Overall price reaction was subdued with investors’ attention fixed on Iran.
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