Oil Prices Extend Gains for Third Day as Iran Protests Fuel Supply

Oil prices extends their rally for the third consecutive day as escalating protests in Iran raised concerns about potential supply disruptions from one of OPEC's key producers.

Oil prices increased for the third day in a row due to growing protests in Iran, which urged fears about supply interruption from OPEC's fourth-largest producer, with Brent crude reaching $63.89 and West Texas Intermediate (WTI) hitting $59.65 per barrel. Fears of supply interruptions due to tensions in the Middle East and production problems in Venezuela led investment firms to expand their bullish bets. The market's sensitivity to geopolitical threats in important oil-producing regions is reflected in the ongoing rise.

As OPEC's fourth-largest producer, Iran holds significant importance in global oil supply chains. The rising protests in the nation have raised market fears about potential delays to oil production and export capabilities. Any considerable drop in Iranian oil output might cause supply constraints in global markets, especially considering the country's large production capacity.

The present market dynamics emphasize the sensitivity of global oil supply to geopolitical conflicts in major producing countries. Middle East interruptions, along with Venezuela's production concerns, have resulted in a risk premium in oil prices as traders account for future supply deficits from these key sources.

The sustained three-day rise illustrates market sensitivity to geopolitical developments and emphasizes the need of consistent output from major OPEC members in sustaining global energy security.

Since oil gained the most in two days since October on January 12, President Donald Trump has stated that the US is carefully following the protests in Iran and is considering potential alternatives as the Islamic republic enters its third week of countrywide rallies, the largest since 2022.

On January 9, the US President called CEOs of major oil companies, such as ConocoPhillips, ExxonMobil, and Chevron, to a conference at the White House to address Venezuela. Even while executives voiced uncertainty and the chairman of Exxon referred to the country as "uninvestable," Mr. Trump offered US$100 billion (S$128.6 billion) of the businesses' cash to rebuilding the oil industry in Venezuela, a member of the Organization of Petroleum Exporting Countries. In response, Mr. Trump threatened to prevent Exxon from making investments in Venezuela.