US-Iran Conflict Worries Lift Crude Oil Prices by 2%

By Adedapo Adesanya

Crude oil prices were up by around 2 per cent as traders worried about escalating tensions between the United States and Iran, which have stepped up military activity in the oil-producing Middle East.

The price of Brent crude futures grew by $1.31 or 1.9 per cent to $71.66 a barrel, while US West Texas Intermediate (WTI) crude futures appreciated by $1.24 or 1.9 per cent to $66.43 a barrel.

Axios reported that the US is moving closer to a war with Iran. A campaign in Iran would be nothing like the Venezuela blitz and could involve “a massive, weeks-long campaign,” the publication reported, citing sources. The US has deployed aircraft carriers, warships and jets to the region.

Two aircraft carriers and dozens of land-based planes have moved to the Gulf, which The Wall Street Journal reported was enough to wage a sustained and weekslong air war against Iran.

Although the US President Donald Trump has not yet made a final decision about a possible military intervention, it has been reported that it has been discussed among top US national security officials.

However, it was also reported that the US President has discussed options, including a strike that could be ordered as soon as this coming Saturday. He warned Iran on Thursday that it must reach a deal over its nuclear programme or “bad things” will happen, and appeared to set a 10-day deadline before the US might take action.

Iran planned a joint naval exercise with Russia after it shut down the Strait of Hormuz for a few hours for military drills. The Strait is a vital link for trade, with about 20 per cent of global oil supply passing through it.

It issued a notice to airmen that it planned rocket launches in areas across the south of the country on Thursday, while some countries have asked their residents to leave Iran.

Adding to the difficult U.S.-Iran talks, the Russia-Ukraine talks in Geneva also broke down without any breakthrough and pushed oil prices higher.

Crude oil exports from Saudi Arabia, the world’s largest oil exporter, fell to 6.988 million barrels per day, their lowest level since September.

US crude stocks dropped by 9 million barrels, as refining utilisation and exports climbed, according to the Energy Information Administration (EIA). Gasoline (petrol) and distillate inventories also fell last week, thanks to higher consumer demand. Before this, the American Petroleum Institute (API) estimated that crude oil inventories in the US fell by 609,000 barrels in the week ending February 13, after increasing by 13.4 million barrels in the week prior.