Stocktwits - Oil prices gained on Wednesday on concerns over supply disruptions after reports suggested that Israel is looking to strike at Iranian nuclear facilities.
Brent crude futures rose 1.4% to $66.27 per barrel, while West Texas Intermediate crude futures slipped 1.5% to $62.96 per barrel at 4.42 am ET.
CNN reported, citing U.S. officials, that intelligence suggests Israel is preparing to strike Iran’s nuclear facilities, but Israeli leaders are yet to make a final decision.
"Such an escalation would not only put Iranian supply at risk, but also (put supply at risk) in large parts of the broader region," ING commodities strategists said, according to a Reuters report.
U.S. President Donald Trump has repeatedly warned Iran of severe sanctions or even military actions if it continues with its nuclear enrichment program. Iran maintains that it does not intend to acquire any nuclear weapons.
Earlier this week, Iran’s Supreme Leader, Ayatollah Ali Khamenei, expressed doubts that ongoing talks with the U.S. could result in an agreement.
“Iran has increased its supply by about a million barrels a day over the last couple of years,” Samantha Dart, Goldman Sachs’ co-head of global commodities research, said to Bloomberg TV.
Dart added that if the same amount of oil could be removed from the market, it could represent an upside of about $8 a barrel to the crude oil price. However, she said that OPEC+ still has a lot of spare capacity, which could allay fears of a supply shock.
Crude oil prices have been pressured in April due to the OPEC+ oversupply and concerns over a global economic slowdown driven by tariffs.
Eight OPEC+ countries will meet on June 1 to discuss July production levels.
The United States Oil Fund (NYSE:USO) has fallen 10.7% year to date, while the Energy Select Sector SPDR Fund is down 3.2%.
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