Oil prices rose around two per cent on Thursday to their highest level in six months, as traders worried about escalating tensions between the United States and Iran, which have stepped up military activity in the oil-producing Middle East.
Brent futures rose $1.25, or 1.8 per cent, to $71.60 a barrel by 13:29 EST (18:29 GMT), while US West Texas Intermediate crude rose $1.22, or 1.9 per cent, to $66.41.
After advancing more than four per cent on Wednesday, Brent is on track to close at its highest since July 31, while WTI is on track for its highest close since August 1. Oil prices got a boost from, "geopolitical tensions and the worry that the US is going to strike (Iran) in the near future," said Andrew Lipow, president of Lipow Oil Associates.
"The market will continue to rally in anticipation of something happening." Iran planned a joint naval exercise with Russia on Thursday, Iran's semi-official Fars news agency reported, days after it shut down the Strait of Hormuz for a few hours for military drills.
The Strait is a vital link for trade, with about 20 per cent of global oil supply passing through it. President Donald Trump said the US had to make a meaningful deal with Iran.
"Good talks are being had. It's proven to be, over the years, not easy to make a meaningful deal with Iran."
"We have to make a meaningful deal, otherwise bad things happen," Trump told the first meeting of his Board of Peace. The US has deployed warships near Iran, with US Vice President JD Vance saying Washington was considering whether it should continue diplomatic engagement with Tehran or pursue another option.
Iran issued a notice to airmen that it planned rocket launches in areas across the south of the country on Thursday, according to the US Federal Aviation Administration website. Some countries have asked their residents to leave Iran.
Meanwhile, two days of peace talks in Geneva between Ukraine and Russia ended on Wednesday without a breakthrough, as Ukrainian President Volodymyr Zelenskiy accused Moscow of stalling US-mediated efforts to end the four-year-old war. On the supply side, US crude stocks eased by nine million barrels, as refining utilisation and exports climbed.
That was contrary to expectations in a Reuters poll that crude stocks would rise by 2.1 million barrels in the week to February 13. Gasoline and distillate inventories also fell last week, thanks to higher consumer demand.
Separately, crude oil exports from Saudi Arabia, the world's largest oil exporter, fell to 6.988 million barrels per day, their lowest level since September, data from the Joint Organisations Data Initiative showed on Thursday.
Earlier this month, Reuters reported that producer group OPEC and its allies were leaning towards a resumption in oil output increases from April.
(Reporting by Siddharth Cavale in New York, Arathy Somasekhar in Houston, Enes Tunagur in London; additional reporting by Yuka Obayashi and Emily Chow. Editing by David Gregorio and Joe Bavier, Kirsten Donovan)
