Oil rose as traders factored in the possibility of US military action in Iran that could upend supplies from one of OPEC’s leading producers, and a massive winter storm in the US pushing up the price of refined products.
West Texas Intermediate rose 2.9% to settle above $61, posting a fifth weekly gain. Prices rose after President Donald Trump revived his threats to use military force against Iran’s senior leadership, with a US Navy carrier strike group moving toward the Middle East.
While Trump previously walked back pledges to attack the country, a renewed pressure campaign could add to oil’s geopolitical risk premium given Iran’s strategic importance to the industry.
Adding to the concern and the geopolitically driven bullish momentum, the US is also pressuring Iraq to disarm Iran-backed militias, the Financial Times reported. Meanwhile, the Kremlin poured cold water on hopes of a breakthrough to end Russia’s war in Ukraine. An end to the conflict could limit supply disruptions and sanctions on Moscow’s crude.
“The bottom line is that geopolitical headlines remain plentiful and uncertainty remains exceptionally high. Heading into the weekend, crude is likely to trade in whichever direction the headlines push it,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group.
“For now, recent shifts in military assets and official commentary appear to be leaning back toward renewed concerns over potential military action involving Iran,” Babin added.
If the US strikes Iran, prompting a retaliation, it is unlikely but possible that the conflict will impact oil supplies, according to Rapidan Energy Group. The geopolitical analysis firm assigned a 20% probability to a “sustained and severe interruption” in energy production and flows in the region.
Oil products such as diesel, which can be used as heating oil in the US Northeast, are also pushing higher as the US braces for bitter cold.
Meanwhile, the dollar posted its worst week in seven months, capping a tumultuous few days that saw a deterioration of US-Europe relations and unresolved talks to end the war in Ukraine. The drop helped make commodities priced in the currency cheaper for many buyers, in turn pushing crude prices higher.
Tensions from Venezuela to Iran, along with disruptions in supplies from Kazakhstan, have helped support oil prices since the start of the year after an 18% slump in 2025. But futures remain under pressure from concerns the market is headed for a glut.
Global stockpiles are projected to swell by 3.7 million barrels a day this year, according to the International Energy Agency’s latest assessment, though it has cautioned the actual overhang may not reach these levels.
Some market participants appear more bullish. SLB, the world’s largest oilfield-services provider, said that the worst may be behind the global oil market, predicting a gradual ramp-up in drilling activity in major regions. Hedge funds’ net-long positions in WTI were at their highest in five months, according to Commodity Futures Trading Commission data.
Oil Prices
WTI for March delivery climbed 2.9% to settle at $61.07 a barrel in New York.
Brent for March settlement rose 2.8% to settle at $65.88 a barrel.
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