Oil climbs amid concerns about Iranian supply disruption

Oil prices rose for a fifth consecutive session on Wednesday, driven by concerns over potential disruptions to Iranian supplies amid the risk of a US military strike on Iran and possible retaliatory attacks targeting US interests across the region.

Brent crude futures climbed by 85 cents, or 1.3%, to $66.32 a barrel by 13:02 GMT, while US West Texas Intermediate crude rose by 80 cents, or 1.3%, to $61.95 a barrel.

Tehran warned US allies in the Middle East that it would target American bases on their territory if Washington launched an attack on Iran. In this context, some personnel were asked to leave a US military base in Qatar.

Jorge Montepeque, chief executive of Onyx Capital Group, said: “We are in a period of geopolitical instability and supply disruption risk.” He added: “The protests in Iran are being viewed as potentially leading to regime change, which would be a major development, and the probability of a US attack now appears elevated.”

US President Donald Trump on Tuesday urged Iranians to continue protesting, saying that help was on the way, without specifying the nature of that assistance.

Analysts at Citigroup said in a research note that “the protests in Iran carry risks of tightening global oil market balances, either through potential near-term supply losses or via a higher geopolitical risk premium,” adding that they had raised their three-month Brent forecast to $70 a barrel.

The analysts noted, however, that the protests have not spread to Iran’s main oil-producing regions so far, limiting their immediate impact on supply.

Oil’s gains were capped by large increases in US crude and fuel inventories, according to data from the American Petroleum Institute released late on Tuesday.

The API, citing market sources, said US crude inventories rose by 5.23 million barrels in the week ended January 9.

Gasoline inventories increased by 8.23 million barrels, while distillate stocks rose by 4.34 million barrels from the previous week.

Official inventory data from the US Energy Information Administration are due later on Wednesday. A Reuters poll conducted on Tuesday showed that US crude inventories were expected to have declined last week, while gasoline and distillate stocks were forecast to rise.

Further limiting price gains, Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), has begun rolling back production cuts imposed under US sanctions, alongside the resumption of crude exports, according to three sources.

Two very large crude carriers left Venezuelan waters on Monday, each loaded with around 1.8 million barrels of crude, in what may be the first shipments under a 50-million-barrel supply agreement between Caracas and Washington, aimed at reviving exports following the US seizure of Venezuelan President Nicolas Maduro.