Oil prices advanced on Wednesday, rebounding from earlier losses as concerns grew over potential supply disruptions from Iran amid the risk of a U.S. military strike.
By 09:25 ET (14:25 GMT), March Brent crude futures were up 1.1% at $66.17 a barrel, while U.S. West Texas Intermediate crude gained 1% to $61.74 a barrel. The move followed a sharp rally on Tuesday, when both benchmarks jumped more than 2.5%, pushing Brent to an 11-week high and WTI to a 10-week peak after four straight sessions of gains.
Iran supply fears underpin oil prices
The latest rise in oil prices has been driven by escalating geopolitical tensions tied to intensifying anti-government protests in Iran. The unrest has heightened fears over future crude exports from one of OPEC’s largest producers, prompting traders to build a sizable risk premium into prices.
Comments from U.S. President Donald Trump added to market anxiety. Trump warned of possible military action if Iranian authorities continue violent crackdowns on protesters and urged demonstrators to “take over your institutions,” saying on social media that “help is on the way.”
In response, Tehran warned U.S. allies in the Middle East that it would target American military bases on their territory if Washington launched an attack. Reports also indicated that some personnel were advised to leave a U.S. military base in Qatar. Trump has further threatened to impose tariffs on countries doing business with Iran, increasing efforts to isolate the regime and adding to geopolitical risk premiums.
U.S. crude inventories rise sharply
Amid these tensions, data from the American Petroleum Institute released on Tuesday showed U.S. crude inventories rose by 5.3 million barrels last week, well above expectations for an increase of around 2 million barrels.
Gasoline inventories jumped by roughly 8.2 million barrels, while distillate stocks rose by about 4.3 million barrels, pointing to ample supplies of refined products. Market attention now turns to official figures from the U.S. Energy Information Administration, due later Wednesday, for confirmation of inventory trends.
Citi raises near-term Brent forecast
Citi has lifted its short-term outlook for Brent crude, raising its 0–3 month price target to $70 a barrel from $65 as geopolitical risks fuel near-term upside pressure.
“We now believe this rally has scope to extend beyond our previous $55–65 per barrel range in the coming days,” Citi analysts led by Francesco Martoccia said in a note, citing higher risks of supply disruptions linked to Iran and the Russia-Ukraine conflict.
The analysts noted that during the Iran-Israel flare-up in mid-2025, Brent climbed from the low $60s to around $77 a barrel, adding that Iran is now under even greater pressure. They cautioned, however, that oil market balances remain looser than during past spikes, and that any sharp rally could encourage producer hedging. They also pointed out that President Trump favors lower oil prices and that OPEC+ retains the capacity to increase supply from the second quarter of 2026 if major disruptions emerge.
