Oil prices climbed about 1.5% on Thursday, extending gains for a third straight session, as growing fears of a potential U.S. military strike on Iran heightened concerns over supply disruptions in the Middle East.
Brent crude futures rose 94 cents, or 1.4%, to $69.34 a barrel by early European trading, while U.S. West Texas Intermediate (WTI) crude gained 92 cents, or 1.5%, to $64.13 a barrel.
Both benchmarks have advanced roughly 5% since the start of the week and are trading at their highest levels since late September.
Geopolitical tensions drive oil higher
The rally has been fueled by escalating tensions between the United States and Iran. U.S. President Donald Trump has increased pressure on Tehran to curb its nuclear program, repeatedly warning of possible military action. A U.S. naval group has also recently arrived in the region, adding to market anxiety.
Iran is the fourth-largest producer within the OPEC, pumping around 3.2 million barrels per day. Any disruption to Iranian output could significantly tighten global oil supply.
According to a Reuters report citing U.S. officials, Washington is weighing options that could include strikes on Iranian security forces or leadership targets in an effort to destabilize the current regime.
Supply disruptions add to price pressure
Analysts say geopolitical risk remains the primary driver of oil prices, although temporary supply outages have also provided support. Unplanned disruptions in Kazakhstan and the United States have added to near-term tightness in the market.
Kazakhstan’s massive Tengiz oilfield is being brought back online in stages after electrical fires curtailed production last week. Operators aim to restore full output within the coming days.
In the U.S., the world’s largest oil producer, companies have been restarting crude and natural gas wells after severe cold weather linked to Winter Storm Fern disrupted operations over the weekend.
Inventory data supports rally
Oil prices also found support from a surprise drawdown in U.S. crude stockpiles. Data from the Energy Information Administration showed inventories fell by 2.3 million barrels to 423.8 million barrels in the week ending January 23. Analysts had expected a build of around 1.8 million barrels.
Some banks now see further upside risks. Analysts at Citi said rising tensions with Iran have added an estimated $3 to $4 per barrel in geopolitical risk premium. They noted that further escalation could push Brent crude prices toward $72 per barrel over the next three months.
