Oil Prices Rise Amid Ongoing US-Iran Tensions

Oil Prices Rally Amid Escalating US-Iran Tensions

West Texas Intermediate (WTI) oil prices jumped 2.8% to close at $67 per barrel, its highest settlement since August, as traders braced for any escalation to US-Iran tensions heading into the weekend. The surge in oil prices was driven by concerns about a potential US strike on Iran, which has helped oil prices jump more than 15% so far this year, offsetting broad expectations of a supply glut.

US-Iran Negotiations Fail to Reach Agreement US President Donald Trump signaled he was "not happy" with negotiations aimed at averting an imminent US attack, urging Iran to make a deal over its nuclear program. The two sides failed to reach an agreement in Geneva earlier this week, leading to concerns about a potential US strike on Iran. The US, China, and several other nations advised citizens to leave some parts of the region.

Market Outlook The market has been on edge as President Trump has ordered the largest US military buildup in the region since the 2003 invasion of Iraq. Concerns about a potential US strike on Iran have heightened, with odds of a US strike on Iran by March 1 surging to roughly 26% on Friday, according to the Polymarket prediction markets site.

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Shipping and Geopolitics Freight rates have climbed in recent days, driven by a major Korean shipowner's bullish tanker bet and geopolitical tensions. Traders are watching for how tensions could impact Iranian oil flows as well as shipping through the Strait of Hormuz, a narrow passage separating Iran and the Arabian peninsula. Two shipping companies said on Friday that they're rerouting vessels to sail south of Africa instead of transiting the Red Sea and Suez Canal.

OPEC Meeting This weekend, traders will also be closely watching a scheduled OPEC supply meeting on Sunday, as conflict risks cloud the outlook. Commerzbank reported that OPEC is likely to increase oil production only slightly from April onwards, but geopolitical risks mean that there is unlikely to be any pressure on prices – for the time being.