NEW YORK: Oil prices climbed about 4 percent to a five-month high on Thursday on rising concerns that global supplies could be disrupted if the US decides to attack Iran, one of OPEC’s biggest crude producers. Brent futures rose USD2.50, or 3.7 percent, to USD70.90 a barrel by 12:47 p.m. EST (1747 GMT), while US West Texas Intermediate (WTI) gained $2.35, or 3.7%, to $65.56.
That pushed both crude benchmarks into technically overbought territory and put Brent on track for its highest close since July 31 and WTI on track for its highest close since September 26. US President Donald Trump is weighing options against Iran that include targeted strikes on security forces and leaders to inspire protesters, multiple sources said, even as Israeli and Arab officials said air power alone would not topple Tehran’s clerical rulers. In Iran, meanwhile, plainclothes security forces have rounded up thousands of people in a campaign of mass arrests and intimidation to deter further protests.
Two US sources familiar with the discussions said Trump wanted to create conditions for “regime change” after a crackdown crushed a nationwide protest movement earlier this month, killing thousands of people.
“The immediate (market) concern ... is the collateral damage done if Iran takes a swing at its neighbours or possibly even more tellingly, it closes the Strait of Hormuz to the 20 million barrels per day of oil that navigates it,” said PVM analyst John Evans.
Iran was the third-biggest crude producer in the Organization of the Petroleum Exporting Countries (OPEC) behind Saudi Arabia and Iraq, according to US Energy Information Administration (EIA) data. European Union foreign ministers, meanwhile, adopted new sanctions on Iran on Thursday targeting individuals and entities involved in a violent crackdown on protesters. Separately, the EU designated Iran’s Revolutionary Guards as a terrorist organization.
“The potential for Iran getting hit has escalated the geopolitical premium of oil prices,” Citi analysts said in a note.—Reuters
