(RTTNews) – Crude oil rose on Friday, recovering from yesterday’s losses as fresh war threats in the Middle East raised concerns about supply disruptions.
WTI crude oil for March delivery was last seen trading $1.75 (or 2.95%) higher at $61.11 a barrel.
Iran’s clerical regime unleashed violence among its citizens to quell a civil uprising over the ruling government’s failure to stop inflation and the decline of the Iranian currency.
Protests began in late December, with the government using excessive force to break up demonstrations held across the country, leading to the arrest of thousands of civilians. The US-based Human Rights Watch news agency confirmed more than 4,500 deaths linked to the unrest.
Many of the arrested protesters were scheduled to be executed after US President Donald Trump warned Iran that the US would intervene and hit Iran hard. Trump also announced 25% tariffs on any country that trades with Iran.
Iran halted the executions and Trump said he was halting its military intervention.
However, the US has steadily built up its military assets at its bases in the Middle East.
Last week, media reports said the USS Abraham Lincoln aircraft carrier and its strike group were headed from the South China Sea to West Asia. As a result, Iran closed its airspace.
Yesterday, while returning from a trip to Switzerland after attending the World Economic Forum, Trump confirmed that the US has an “armada” headed towards Iran, but said he wanted the US not to have to use “big force”.
Iranian Foreign Minister Abbas Araghchi responded by saying that Iran “will retaliate with everything they have.”
These developments have increased concerns among oil traders. If Israel jumps in, the attacks and damage could be massive.
As the fifth-largest crude oil producer in OPEC, which pumps out about 3.3 million barrels of oil per day, a war with the US could cause serious disruption to production in Iran.
A blockage in the Strait of Hormuz, a choke point for world oil trade bordering Iran, could result in severe supply disruptions.
Earlier this month, the US ousted Venezuelan President Nicolas Maduro through military maneuvers and took full control of the country’s oil industry. Traders believe Trump may try something similar in Iran.
Negotiators from the US, Russia and Ukraine are sitting together in the United Arab Emirates today in the first official trilateral peace talks to move forward on a US-written peace proposal to end the Russia-Ukraine war. The discussion may possibly continue till tomorrow.
Yesterday, the US Energy Information Administration reported that US crude oil stockpiles increased by 3.6 million barrels and gasoline stockpiles increased by 5.98 million barrels, reaching the highest level in nearly 5 years.
On the data front, Baker Hughes Co revealed that crude oil rigs in the US rose to 411 on January 23 from 410 the previous week and total rigs on January 23 increased to 544 from 543 the previous week.
The US dollar index was last seen trading at 97.72, down 0.55%.
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