(RTTNews) – Rebounding from yesterday’s losses, crude oil soared on Friday as fresh war-threats in the Middle East raise supply disruption concerns.
WTI Crude Oil for March delivery was last seen trading up by $1.75 (or 2.95%) at $61.11 per barrel.
Iran’s clerical regime unleashed violence among its citizens to curb a civil uprising over the ruling government’s failure to contain inflation and halt the fall of the Iranian currency.
The protests began in late December, with the government using excessive force to curtail the demonstrations held nationwide, leading to the arrests of thousands of nationals. The U.S.-based Human Rights Activists News Agency verified more than 4,500 deaths connected to the unrest.
Several arrested protestors were to be hanged when U.S. President Donald Trump warned Iran that the U.S. would intervene and hit Iran hard. Trump also announced 25% tariffs on any country that trades with Iran.
Iran halted the executions and Trump stated that he was pausing his military intervention.
However, the U.S. has steadily built up its military assets at its bases in the Middle East.
Last week, media reports said the USS Abraham Lincoln aircraft carrier and its strike group were heading to West Asia from South China sea. As a result, Iran closed its airspace.
Yesterday, while returning from his trip to Switzerland after participating in the World Economic Forum, Trump confirmed that the U.S. has an “armada” heading to Iran but said he wished the U.S. would not have to use the “big force.”
Iranian Foreign Minister Abbas Araghchi responded, stating that Iran will “fire back with everything they have.”
These developments have increased concerns among oil traders. If Israel jumps in, the attacks and damage could scale up massively.
Being the fifth largest crude oil producer in OPEC, extracting around 3.3 million barrels per day, a war with the U.S. could cause severe output disruption in Iran.
A blockage of the Strait of Hormuz, a chokepoint for world’s oil trade bordering Iran, could result in severe supply disruption.
Earlier this month, the U.S. displaced Venezuelan President Nicolas Maduro through military maneuvers and took full control of the nation’s oil industry. Traders view that Trump may attempt something similar in Iran.
To move forward with the U.S.-authored peace proposal to end the Russia-Ukraine war, in the first official trilateral peace talks, negotiators from the U.S., Russia, and Ukraine are sitting together in the U.A.E. today. The discussions could possibly go on until tomorrow.
Yesterday, the U.S. Energy Information Administration reported that U.S. crude inventories climbed 3.6 million barrels and gasoline inventories jumped 5.98 million barrels to a nearly 5-year high.
On the data front, Baker Hughes Company revealed that crude oil rigs in the U.S. increased to 411 on January 23 from 410 in the previous week and total rigs increased to 544 on January 23 from 543 in the previous week.
The U.S. Dollar Index was last seen trading at 97.72, down by 0.55%.
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