Oil prices advanced as traders factored in the possibility of US military action against Iran, a development that could disrupt supplies from a major OPEC producer, while a massive winter storm in the United States pushed refined product prices higher. WTI crude rose 2.9%, settling above $61 per barrel to notch a fifth consecutive weekly gain. Prices were driven upward as former President Trump renewed threats of military force against Iran's senior leadership and a US Navy aircraft carrier strike group steamed toward the Middle East. March-delivery WTI crude climbed 2.9%, settling at $61.07 a barrel. March-delivery Brent crude increased 2.8%, settling at $65.88 a barrel. Although Trump had previously walked back statements about launching a strike on Iran, renewed US pressure is likely to amplify oil's geopolitical risk premium, given the strategic importance of Iran to the petroleum industry. Separately, reports that the Trump administration is pressuring Iraq to form a government that excludes Iran-backed militia groups also contributed to the geopolitically-driven upward momentum in oil prices. Simultaneously, the Kremlin poured cold water on the prospects of a breakthrough in Russia-Ukraine peace talks. An end to the conflict would be expected to limit supply disruptions and sanctions against Moscow. "All in all, geopolitical news continues to flow, and uncertainty remains extremely high. Heading into the weekend, the path for crude prices is likely to be dictated by headline flow," said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. Babin added, "For now, the near-term movement of military assets and official rhetoric appears to be making people concerned again about potential military action involving Iran."
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