Oil Prices Rise on US-Iran Tensions and China Demand Outlook
Oil prices moved higher in Asian trading on Wednesday as investors monitored developments in U.S.-Iran relations and assessed potential fuel demand ahead of China’s Lunar New Year holiday.
Crude markets recovered part of the losses recorded earlier in the week. A softer U.S. dollar, ahead of key American economic data releases, also provided additional support for prices.
Brent crude futures for April delivery gained 0.6% to $69.18 per barrel, while West Texas Intermediate (WTI) crude futures rose 0.6% to $64.19 per barrel.
US-Iran Uncertainty Lifts Oil on Supply Risk Concerns
Tensions between Washington and Tehran remained a key driver for the oil market. Iranian officials stated that recent nuclear talks with the United States allowed Tehran to evaluate Washington’s intentions, and that diplomatic engagement would continue.
The discussions followed last week’s negotiations over Iran’s nuclear program, which came shortly after U.S. President Donald Trump ordered the deployment of additional warships to the Middle East.
Although both sides indicated some progress, concerns escalated after the United States issued warnings to vessels operating in the Strait of Hormuz. Reports also suggested that Washington may consider sending a second aircraft carrier to the region, potentially intensifying geopolitical tensions.
This uncertainty prompted traders to add a risk premium to oil prices, amid fears that any military escalation could disrupt Iranian crude exports and tighten global supply.
China Lunar New Year Travel Boost in Focus
Market participants are also watching China’s upcoming Lunar New Year holiday for signs of stronger fuel demand.
The 2026 Lunar New Year begins on February 17 and will include an extended nine-day public holiday from February 15 to 23. The festive period traditionally leads to higher consumer spending and increased travel activity.
Chinese authorities expect a record 9.5 billion passenger trips during the spring travel season. Outbound tourism is projected to rise across Southeast Asia, although travel to Japan is reportedly declining due to ongoing diplomatic tensions between Tokyo and Beijing.
Despite optimism over holiday-driven fuel demand, recent economic data from China painted a mixed picture. Consumer price index (CPI) inflation came in below expectations, while producer prices remained in contraction, highlighting persistent deflationary pressures in the world’s second-largest economy.
Overall, oil markets remain sensitive to both geopolitical risks in the Middle East and shifts in Chinese demand, two factors likely to influence price direction in the near term.
