Oil rises for third day as Iranian protests raise spectre of disruption
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The possibility of a disruption to Iran’s daily exports of almost two million barrels has tempered concerns over a global glut that caused a slump in prices and made investors increasingly bearish.
PHOTO: REUTERS
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SINGAPORE – Oil on Jan 12 held its biggest two-day gain since October, as escalating protests in Iran threatened supply from OPEC’s fourth-biggest producer.
Brent crude futures edged up 0.08 per cent, or five cents, to US$63.39 a barrel by 12.33pm Singapore time, after jumping almost 6 per cent over Jan 8 and 9. US West Texas Intermediate crude inched up 0.07 per cent, or four cents, to US$59.16 a barrel.
President Donald Trump said that the US is closely monitoring the protests in Iran and is mulling over potential options as the Islamic republic faces its third week of nationwide protests, the largest since 2022.
“We’re looking at it very seriously. The military is looking at it, and we’re looking at some very strong options,” Mr Trump told reporters on Jan 11. “We’ll make a determination.”
He also touted a meeting with Tehran.
The possibility of a disruption to Iran’s daily exports of almost two million barrels has tempered concerns over a global glut that caused a slump in prices and made investors increasingly bearish. The scale of risk has shown up clearest in options markets, where the skew towards bullish calls is the biggest for US crude futures since July.
The unrest is the most significant challenge to Iran’s Supreme Leader, Ayatollah Ali Khamenei, since a nationwide uprising in 2022. It follows a surge in oil prices during a 12-day war between Iran and Israel in June, which quickly eased after the US intervened and brokered a peace deal.
The Iranian turmoil has also shifted the focus away from Venezuela. Mr Trump on Jan 10 signed an executive order to safeguard the Latin American country’s oil revenue held in US Treasury accounts from the nation’s creditors, but broader political uncertainty could still suppress much-needed investment.
Unless the Iranian protest “actually disrupts exports or shipping, the market will mostly fade it”, said Mr Haris Khurshid, chief investment officer at Karobaar Capital in Chicago. Nevertheless, “the bar for a volatility spike is low”, he said.
The US President on Jan 9 summoned leaders of oil majors, including Chevron, ExxonMobil and ConocoPhillips, to a summit at the White House to discuss Venezuela. There, Mr Trump pledged US$100 billion (S$128.6 billion) of the companies’ capital towards rebuilding the oil sector in Venezuela, a member of the Organisation of Petroleum Exporting Countries, even as executives expressed caution and Exxon’s head called the nation “uninvestable”. Mr Trump said in response that he might block Exxon from investing in Venezuela.
Meanwhile, Ukraine targeted three drilling platforms in the Caspian Sea owned by Russian oil major Lukoil, in the latest move to weaken Moscow’s access to funds to fuel the almost four-year-old war. BLOOMBERG
