Summary
- Brent and WTI benchmarks up more than $1
- Trump unpredictability keeps investors on edge
- US crude stockpiles fall sharply
(Reuters) – Oil prices rose on Thursday after Israel and Iran continued to exchange missile attacks overnight and U.S. President Donald Trump’s stance on the conflict kept investors on edge.
Brent crude futures rose $1.06, or 1.4%, to $77.76 a barrel by 1151 GMT. U.S. West Texas Intermediate crude for July was up $1.26, or 1.7%, at $76.40. Brent had surged to its highest in nearly five months at $78.50 on June 13, when Israel began its attacks.
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The conflict entered its seventh day on Thursday after Israel struck Iranian nuclear sites and Iranian missiles hit an Israeli hospital.
There is still a “healthy risk premium baked into the price as traders wait to see whether the next stage of the Israel-Iran conflict is a U.S. strike or peace talks”, said Tony Sycamore, analyst at trading platform IG.
Goldman Sachs said on Wednesday that a geopolitical risk premium of about $10 a barrel is justified, given lower Iranian supply and risk of wider disruption that could push Brent crude above $90.
President Trump told reporters on Wednesday that he had yet to decide whether the U.S. will join Israel in its attacks on Iran.
As a result of the unpredictability that has long characterised Trump’s foreign policy, “markets remain jittery, awaiting firmer signals that could influence global oil supply and regional stability” said Priyanka Sachdeva, analyst at Phillip Nova.
The risk of major energy disruption will rise if Iran feels existentially threatened, and U.S. entry into the conflict could trigger direct attacks on tankers and energy infrastructure, said RBC Capital analyst Helima Croft.
Iran is the third-largest producer among members of the Organization of the Petroleum Exporting Countries, extracting about 3.3 million barrels per day (bpd) of crude oil.
About 18 million to 21 million bpd of oil and oil products move through the Strait of Hormuz along Iran’s southern coast and there is widespread concern the fighting could disrupt trade flows.
Separately, the U.S. Federal Reserve kept interest rates steady on Wednesday but pencilled in two cuts by the end of the year. Lower interest rates could stimulate the economy, helping to support demand for oil.
On the supply side, U.S. crude stockpiles fell sharply last week, registering the largest decline in a year, the Energy Information Administration said on Wednesday.
Russia, the U.S. and Saudi Arabia could act jointly to stabilise oil markets if needed, Russia’s investment envoy Kirill Dmitriev told Reuters.
Reporting by Enes Tunagur, Colleen Howe and Sam Li Editing by David Goodman
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