U.S. West Texas Intermediate crude rose 28 cents, or 0.5%, to $59.78, the highest since Dec. 8 earlier in the session.Iran, one of the Organization of the Petroleum Exporting Countries’ biggest producers, is facing its largest anti-government demonstrations in years, with US President Donald Trump warning of possible military action over deadly force against protesters.
Trump is expected to meet senior advisers on Tuesday to discuss options on Iran, a US official told Reuters.
The US president said on Monday that any country doing business with Iran would be subject to a 25% tariff on all business done with the United States.
The developments are important for oil markets as Iran is a major producer subject to sanctions and any escalation could disrupt supply or add a geopolitical risk premium. “The unrest in Iran has added approximately $3-4/barrel of geopolitical risk premium to oil prices in our view,” Barclays said in a note.
Markets are also grappling with concerns about additional crude oil supply entering the market due to Venezuela’s expected return to exports. Following the ouster of President Nicolas Maduro, Trump said last week that the government in Caracas is about to hand over as much as 50 million barrels of oil to the US, subject to Western sanctions.
Global oil trading houses have emerged as early winners in the race to control Venezuelan crude flows, gaining an advantage over US energy giants.
Elsewhere, geopolitical tensions escalated as Russian forces launched attacks on Ukraine’s two largest cities early Tuesday, Ukrainian officials said, killing one person in the northeastern city of Kharkiv.
In the United States, the Trump administration renewed its attacks on the Federal Reserve, underscoring markets’ concerns about the central bank’s independence and increasing uncertainty about future economic conditions and oil demand.
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