Brent oil futures prices jumped today, hitting a four-month high on rising concerns of a possible US military attack on Iran, OPEC's fourth-largest producer, with output of 3.2 million barrels per day.
"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.
Brent crude futures were up $1.52, or 2.22%, to $69.92 a barrel this afternoon. At its intra-day peak, Brent traded as high as $70.35 a barrel, its highest since late-September.
US West Texas Intermediate crude was up $1.48, or 2.34%, to $64.69 a barrel. WTI futures earlier topped $65 a barrel, also a four-month high.
US President Donald Trump has increased pressure on Tehran to end its nuclear programme, with threats of military strikes and the arrival of a US naval group in the region.
Trump is considering options that include targeted strikes on security forces and leaders to inspire protesters to potentially topple Iran's rulers, Reuters reported today, citing US sources familiar with the discussions.
Some analysts are forecasting higher prices because of the Iranian concerns.
"The potential for Iran getting hit has escalated the geopolitical premium of oil prices by potentially $3 to $4 (per barrel)," Citi analysts said in a note yesterday, adding that further geopolitical escalation could push prices to as high as $72 a barrel for Brent over the next three months.
Elsewhere, the huge Tengiz oilfield in Kazakhstan is being restarted in stages after electrical fires cut output last week, with the aim to reach full production in a week.
In the US, the world's biggest oil producer and largest liquefied natural gas exporter, crude and gas producers were bringing wells back online after disruption from Winter Storm Fern over the weekend.
"Disruptions in Kazakhstan (CPC terminal, Tengiz field force majeure) have removed significant number of barrels from the market, add up the cold weather in the US which disrupted - although temporarily - US crude production and suddenly the oil market is much tighter than expected," UBS analyst Giovanni Staunovo said.
