04.02.202618:07:28UTC+00Crude Oil Rallies on Collapsing Iran Talks

On Wednesday, WTI crude oil futures climbed to $65 per barrel, closing in on the four-month high of $65.5 recorded on January 29th. This surge is largely attributed to escalating geopolitical tensions between the US and Iran, which have reignited higher risk premiums. Recent reports have highlighted a breakdown in the proposed Iran nuclear talks, diminishing earlier hopes that negotiations between Washington and Tehran might avert military action in the Middle East. Tensions were further exacerbated by the interception of Iranian drones near a US aircraft carrier yesterday. Any further deterioration in the region could potentially lead the US to intensify sanctions against Iran, a significant oil exporter to China, while Iran might obstruct tankers traversing the Strait of Hormuz. On the supply front, the Energy Information Administration reported a 3.5 million barrel decrease in US crude inventories last week, significantly less than the 11.1 million barrel drop projected by the American Petroleum Institute on Tuesday. Nonetheless, refinery hubs worldwide continue to report a plentiful crude oil supply, with OPEC predicting a surplus for the year.