Oil prices rose by about 2% during Wednesday’s trading, supported by potential supply risks if tensions between the United States and Iran escalate, alongside signs of improving demand as inventories decline at some key hubs.

Brent crude futures climbed by $1.41, or 2.1%, to reach $70.21 per barrel by 11:56 GMT, while US West Texas Intermediate crude rose $1.36, or around 2.1%, to $65.31.

Giovanni Staunovo, oil analyst at UBS, said ongoing tensions in the Middle East continue to support prices, despite no actual supply disruptions so far.

A cautious diplomatic path

In this context, the Iranian Foreign Ministry spokesperson said on Tuesday that nuclear talks with the United States have allowed Tehran to assess Washington’s seriousness and have shown sufficient alignment to continue the diplomatic track.

Meanwhile, President Donald Trump said he is considering sending a second aircraft carrier to the Middle East, even as Washington and Tehran prepare to resume negotiations aimed at avoiding a new conflict.

Tamas Varga, analyst at PVM Oil Associates, said political rhetoric remains sharp at times, but there are still no concrete signs of real escalation, noting that Trump believes Iran will ultimately seek an agreement on its nuclear and missile program.

Additional support factors

Prices also drew support from a modest decline in the US dollar, as a stronger dollar typically weakens demand for dollar-denominated oil from foreign buyers.

Oil was further supported by signs that excess supply is narrowing, as markets absorb part of the additional output that emerged during the last quarter of 2025.

Staunovo noted that drawdowns in crude inventories at the Amsterdam–Rotterdam–Antwerp (ARA) refining and storage hub, as well as at Fujairah, reflect relatively tighter market conditions.

Focus on US inventory data

Traders are awaiting the weekly US oil inventory data from the Energy Information Administration, due later on Wednesday.

US crude inventories rose by 13.4 million barrels in the week ending February 6, according to market sources citing data from the American Petroleum Institute released on Tuesday.

The US dollar declined broadly during Wednesday’s trading, especially against the Japanese yen and the Australian dollar, while the Japanese currency continued to outperform after Prime Minister Sanae Takaichi’s landslide election victory.

The dollar fell by 0.75% against the yen to 153.25, bringing its total losses to about 2.5% since last Friday’s close, which came before Takaichi’s weekend victory.

The euro also dropped by 0.6% against the yen to 182.46, bringing its total decline to roughly 1.8% since the election.

Many analysts had expected the yen to weaken if Takaichi won, given her support for tax cuts despite Japan’s heavy debt burden. However, market moves ran counter to those expectations and began reinforcing themselves.

Lee Hardman, senior currency analyst at MUFG, said the yen’s failure to weaken despite Takaichi tightening her grip on power encouraged speculators to trim short yen positions in the near term.

Broader dollar weakness

The dollar lost further momentum against other major currencies, with the euro rising 0.16% to $1.1914, and the British pound gaining 0.3% to $1.3680.

The US currency also fell by 0.25% against the Swiss franc to 0.7659.

Pressure on the dollar followed data showing US retail sales slowed more than expected in December, alongside a separate report indicating slower growth in labor costs during the fourth quarter.

Upcoming jobs data

Markets are awaiting the January US jobs report, which was delayed from last week due to the brief government shutdown, as the next key test for the dollar’s weakness trend.

A Reuters survey showed nonfarm payrolls are expected to have increased by about 70,000 jobs last month, after a 50,000 gain in December. Any upside or downside surprise could shift Federal Reserve policy expectations.

Markets are currently pricing in about 60 basis points of rate cuts by December, despite signals from some policymakers that rates could remain unchanged for longer.

Australian dollar stands out

The Australian dollar was among the top gainers, breaking above $0.71 for the first time since February 2023, and was last up 0.4% at 0.7104.

Andrew Hauser, deputy governor of the Reserve Bank of Australia, said inflation remains too high and stressed that policymakers are committed to doing whatever is necessary to bring it under control.

Moh Siong Sim, currency strategist at OCBC, raised his year-end forecast for the Australian dollar to $0.73 from $0.69, noting that last week’s rate hike to 3.85% — the first among G10 economies excluding Japan — strengthens the case for further tightening.

Markets are pricing roughly a 70% probability of another rate hike to 4.10% at the May meeting, following first-quarter inflation data.

Other currency moves

The New Zealand dollar rose 0.2% to $0.6054, amid expectations that the Reserve Bank of New Zealand could also raise rates before year-end.

The Norwegian krone also outperformed after stronger-than-expected core inflation data led markets to rule out additional monetary easing.

The dollar fell 0.6% to 9.469 kroner, its lowest level since 2022, while the euro slipped 0.4% to 11.28 kroner, marking a ten-month low.

Gold prices rose in European trading on Wednesday, resuming gains that paused temporarily yesterday, and moving back into positive territory near a two-week high, supported by the current decline in the US dollar.

Later today, key US labor market data will be released, namely the January jobs report, which is expected to provide strong clues about the path of Federal Reserve interest rates this year.

Price overview

Gold prices today: Gold rose by 0.95% to $5,072.19, from an opening level of $5,025.48, with a session low recorded at $5,025.48.

At Tuesday’s settlement, gold fell by 0.7%, marking its first daily loss in the past three sessions, within a corrective pullback and profit-taking move.

US dollar

The dollar index fell by 0.35% on Wednesday, hitting a two-week low at 96.57, reflecting weaker performance of the US currency against a basket of major and minor currencies.

A weaker US dollar makes dollar-denominated gold bullion more attractive for holders of other currencies.

The dollar’s decline comes after weaker-than-expected US retail sales data strengthened expectations that the Federal Reserve may ease monetary policy and cut interest rates at least twice this year.

US interest rates

San Francisco Federal Reserve President Mary Daly said on Friday that one or two additional rate cuts may be necessary to address weakness in the labor market.

According to the CME FedWatch tool, pricing for keeping US interest rates unchanged at the March meeting stands at 79%, while the probability of a 25-basis-point rate cut is priced at 21%.

US jobs data

To reprice the above expectations, markets are awaiting later today the monthly US jobs report, which will include key labor market figures, especially nonfarm payrolls, along with the unemployment rate and average hourly earnings.

Nonfarm payroll data is due at 13:30 GMT. Expectations point to the US economy adding 66,000 jobs in January, up from 50,000 in December, with the unemployment rate steady at 4.4%, and average hourly earnings expected to rise by 0.3%.

Gold outlook

Carsten Menke, analyst at Julius Baer, said the recent slight weakening in the US dollar helped support gold and is likely to lift prices today.

Giovanni Staunovo, analyst at UBS, said expectations for slower US job growth, to be confirmed later today, support the view that the Federal Reserve will continue cutting interest rates this year.

SPDR fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, fell on Tuesday by about 0.34 metric tons, bringing total holdings down to 1,079.32 tons.

The euro rose in European trading on Wednesday against a basket of global currencies, resuming gains that had briefly paused versus the US dollar, supported by the greenback’s fall to a two-week low, ahead of the release of key US labor market data.

European Central Bank President Christine Lagarde downplayed the impact of the euro exchange rate on the monetary policy path, saying the currency’s recent rise has already been incorporated into current inflation forecasts.

Price Overview

• Euro exchange rate today: The euro rose against the dollar by 0.2% to $1.1918, from an opening level of $1.1895, and recorded a session low of $1.1886.

• The euro ended Tuesday down more than 0.15% versus the dollar, its first loss in three days, due to correction and profit-taking activity, after earlier hitting a two-week high of $1.1928.

US Dollar

The dollar index fell 0.35% on Wednesday, recording a two-week low at 96.57 points, reflecting broad weakness in the US currency against a basket of major and minor currencies.

The decline followed weaker-than-expected US retail sales data, which boosted expectations that the Federal Reserve may ease monetary policy and cut interest rates at least twice this year.

To reprice those expectations, traders are awaiting later today the US January jobs report, which was postponed from Friday due to the temporary US government shutdown.

Christine Lagarde

Following the European Central Bank’s monetary policy meeting last week, President Christine Lagarde downplayed concerns about the euro–dollar exchange rate’s impact on the bank’s policy path, stressing that recent currency moves do not represent a material shift that would require a policy adjustment.

Lagarde said the euro has risen recently but remained within expected ranges, and that the effects of this rise have already been factored into current inflation projections, emphasizing that monetary policy will remain primarily data-dependent rather than driven by exchange rate volatility alone.

She added that the ECB is closely monitoring the euro’s exchange rate, noting that the strength of the single currency helps curb imported inflation and could speed progress toward targets without the need for additional tightening.

European Interest Rates

• Money markets are pricing the probability of a 25-basis-point rate cut by the European Central Bank in March at below 30%.

• To reprice those probabilities, investors are awaiting further eurozone data on inflation, unemployment, and wages.