Oil Prices Surge Amid Geopolitical Tensions, Igniting Iranian Crude Concerns

Crude oil extends gains as escalating Middle East tensions over Iran outweigh a record build in U.S. oil inventories. Brent crude rose above $69 per barrel, while West Texas Intermediate approached $64 per barrel. Reports of potential U.S. military action against Iranian tankers and a possible deployment of a strike group heightened risk sentiment. The American Petroleum Institute reported a 13.4 million-barrel build in U.S. oil inventories, the largest increase since November 2023. If confirmed, this would temper prices, but traders are focused on the broader geopolitical outlook. The U.S. and Israel are pressuring Tehran to reach a nuclear deal, with concerns that a breakdown could trigger conflict, disrupt Iranian crude flows, and escalate regional hostilities. Iran, the fourth-largest OPEC producer, is estimated to pump 3.3 million barrels per day in January, of which 1.63 million are condensate and crude shipments. Later in the session, OPEC will release a market outlook, followed by an International Energy Agency report warning of a potential major surplus this year as supply outpaces demand.