Oil rose to a fresh four-month high after US President Donald Trump threatened another attack on Iran, urging Tehran to negotiate a nuclear deal.
“Hopefully Iran will quickly ‘Come to the Table’ and negotiate a fair and equitable deal,” Trump said in a post on his Truth Social network, adding that “the next attack will be far worse!” than one that took place last year.
The potential risk to Iranian supplies has injected a premium into oil prices and led futures to start the year on a strong footing, up more than 10% this month, despite forecasts for a glut. That has also kept the cost of bullish options high relative to bearish ones.
West Texas Intermediate futures settled above $63 a barrel after Trump’s post, the highest level since the end of September, extending a 2.9% jump in the previous session.
Prices eased off of intra-day highs after Iran’s mission to the UN repeated in a post on X that it stands ready for dialogue based on mutual respect and interests, but said it will “defend itself and respond like never before,” to US aggression.
Further capping gains, a gauge of the dollar rebounded after Treasury Secretary Scott Bessent said the US continues to have a “strong dollar” policy under Trump, and denied that the administration is intervening in FX markets, specifically to sell the dollar against the yen. The uptick in the dollar made commodities priced in the currency less attractive.
Trump on Wednesday also said the fleet of US ships he’d ordered to the Middle East is larger than the one sent to Venezuela, where President Nicolas Maduro was outed by US forces earlier this year.
There’s already been regional reaction to Trump’s signals over recent days. The Iranian and Qatari foreign ministers stressed the need to continue diplomatic efforts to reduce tensions, while Saudi Arabia’s crown prince said the kingdom’s land won’t be used to carry out operations against Tehran.
“Market sentiment appears to be gradually turning more positive, as the bearish oversupply narrative so prevalent in the second half of 2025 weakens,” Standard Chartered analysts including Emily Ashford wrote in a note. “We envisage an uptick in volatility and increasing focus on both supply and demand risks.”
The prompt spread for both oil benchmarks — the difference between their two nearest contracts — has widened in a bullish backwardation structure over the course of this month, indicating tighter supply. That gauge topped $1 for Brent on Wednesday.
On the physical front, a government report showed that US crude stockpiles fell 2.3 million barrels last week, markedly higher than forecast by a closely-followed industry report. That bullish data point was offset by increases in refined product stockpiles, with gasoline rising to the highest since 2020.
Oil Prices
WTI for March delivery was 1.3% higher to settle at $63.21 a barrel in New York.
Brent for March settlement was up 1.2% to settle at $68.40 a barrel.
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