Oil prices are rising as Trump puts a time limit on the Iran standoff

Oil prices were higher on Friday as concerns increased over the US-Iran conflict. Washington said Tehran will suffer if the country does not reach an agreement on its nuclear activities within days. Brent crude futures rose 21 cents, or 0.3%, to $71.87, while U.S. West Texas Intermediate crude rose 23 cents, or 0.4%, to $66.66.

Prices reached their highest level in six months on Thursday after US President Trump said “really bad things” would happen if Iran does not agree on a nuclear program that the country says is peaceful but which the US says is militaristic. Trump set a deadline of ten to fifteen days.Iran, meanwhile, has planned a joint naval exercise with Russia, a local news agency reported, days after it temporarily closed the Strait of Hormuz for military exercises.

The main oil producer lies opposite the oil-rich Arabian Peninsula across the Strait of Hormuz, through which about 20% of global oil supplies pass. Conflicts in the area could limit oil’s access to global markets and drive up prices.

Oil prices were also supported by reports of declining crude inventories and limited exports in the world’s largest oil producing and exporting countries.

U.S. crude inventories fell by 9 million barrels, while refining use and exports rose, a report from the Energy Information Administration showed on Thursday. Oil exports from Saudi Arabia, the world’s largest oil exporter, fell to 6.988 million barrels per day in December, the lowest since September, data from the Joint Organizations Data Initiative showed.

Elsewhere, Japanese consumer inflation reached 2.0% in January, a two-year low, potentially curbing any central bank plan to raise policy rates.

Low interest rates in oil-importing countries such as Japan are generally seen as supportive of crude oil prices.