Oil Prices Rise as U.S. Prepares Second Aircraft Carrier for Middle East
Oil prices moved higher on Wednesday after reports that the United States is preparing to deploy a second aircraft carrier to the Middle East amid rising tensions with Iran. The geopolitical developments added fresh support to crude markets.
Investors also evaluated new U.S. economic data while keeping a close eye on expected travel demand during China’s upcoming Lunar New Year holiday.
At 15:09 ET (20:09 GMT), Brent crude futures for April delivery rose 1.2% to $69.64 per barrel. Meanwhile, West Texas Intermediate (WTI) crude gained 1.5% to $64.90 per barrel. A slightly weaker U.S. dollar also helped lift oil prices after losses earlier in the week.
U.S.-Iran Tensions Add Risk Premium to Oil
According to The Wall Street Journal, citing U.S. officials, the Pentagon is preparing to send a second aircraft carrier to the Middle East. The move comes despite recent diplomatic talks between Washington and Tehran over Iran’s nuclear program.
Iranian officials stated that discussions allowed them to assess U.S. intentions and that diplomatic efforts would continue. However, optimism was tempered by a U.S. warning issued to ships traveling through the Strait of Hormuz — a critical route for global oil shipments.
The ongoing uncertainty has prompted traders to factor in a geopolitical risk premium, as any potential military escalation could disrupt oil supplies from Iran, a key energy producer.
Chinese Lunar New Year Travel Supports Demand Outlook
Oil markets also found support from expectations of increased fuel demand during China’s Lunar New Year holiday. This year’s celebration, the Year of the Horse, begins on February 17 and includes an extended nine-day public holiday from February 15 to 23.
Chinese authorities anticipate a record 9.5 billion passenger trips during the holiday period, driven by strong domestic and outbound travel. Southeast Asia is expected to see significant inbound tourism, although travel to Japan has reportedly declined due to diplomatic tensions between Tokyo and Beijing.
Despite the upbeat travel outlook, recent Chinese economic data pointed to ongoing deflationary pressures. Consumer price index (CPI) inflation came in below market expectations, while producer prices remained in contraction.
Overall, oil prices are being influenced by a combination of geopolitical risks in the Middle East and shifting demand expectations from China, keeping energy markets on alert.
