Oil climbed to the highest since late October after US President Donald Trump amped up rhetoric over Iran, heightening investor concerns about supply disruptions in OPEC’s fourth-biggest producer and possible American intervention.
West Texas Intermediate futures rose by 2.8% to settle at $61.15 a barrel on Tuesday, reaching the highest level in over two months. Trump told reporters in Detroit that he thinks it’s a good idea if US citizens evacuate from Iran, and reiterated an earlier pledge that “help is on its way” to Iranian protesters amid the biggest challenge to the regime in the Islamic Republic since the 1979 Iranian Revolution.
Traders are closely watching the political unrest in Iran and possible American intervention, which could threaten disruption to the country’s roughly 3.3 million barrels-per-day oil production.
In a post on Truth Social, Trump urged Iranians to continue demonstrations, saying he had “cancelled all meetings” with the country’s officials. The death toll from ongoing protests may be in the thousands, activist groups said. Iran’s Defense Minister Aziz Nasirzadeh, in response to Trump, pledged to “defend the country with full force.”
Oil has gained ground in the early new year, following a run of five monthly losses spurred by expectations for a glut. The climb has come amid US intervention in Venezuela, with Washington’s capture of leader Nicolas Maduro, followed by the worsening wave of unrest in Iran. The rally caught off guard an oil market that was steeped with bearish bets.
Trump also said he would impose a 25% tariff on goods from countries “doing business” with Iran.
“Geopolitical risk is at an all-time high,” Jeff Currie, chief strategy officer of energy pathways at Carlyle, said in a Bloomberg television interview. “That’s a recipe for a spike in prices now.”
The developments in Iran have also compounded existing bullish sentiment amid supply disruptions at the Caspian Pipeline Consortium terminal that loads Kazakh oil into tankers, with a combination of bad weather, drone attacks and maintenance threatening exports. Loadings were revised down by almost half to about 900,000 barrels a day, though Kazakhstan managed to re-direct some flows to alternative routes to minimize the impact to supply.
The risk of a surge is also showing up in options markets, where traders are demanding the biggest premiums for bullish contracts since Israel and the US launched airstrikes on Iran last year. A record volume of bullish Brent call options changed hands on Monday, in part led by large wagers on higher prices.
In another sign of heightened bullishness, “Murban-Dubai spot differentials are creeping up, now trading at near $2.50 a barrel versus $1 a barrel to start 2026,” Ryan McKay, senior commodity strategist at TD Securities, wrote in a note. “This is a sign of some Iran risk pricing.”
The possibility of a disruption to Iran’s daily exports has tempered some of the concerns over the global glut.
“Regime change in Iran could ultimately amplify the downtrend in crude markets as the strong supply picture still holds,” said Florence Schmit, an analyst at Rabobank. “But there is a potential for another rally before that if the unrest, directly or indirectly, targets energy flows.”
Oil Prices
WTI for February delivery rose 2.8% to settle at $61.15 a barrel in New York
Brent for March added 2.5% to settle at $65.47 a barrel
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