Oil prices have steadied after experiencing their most significant daily gain since October, triggered by reports suggesting potential near-term American military intervention in Iran. Brent crude maintained a position above $US70 a barrel, following a 4.3 per cent increase on Wednesday. West Texas Intermediate also traded above $US65.
The surge followed an Axios report indicating that any US military operation would likely span several weeks, with the Israeli government advocating for a strategy aimed at regime change in Iran. A potential conflict introduces risks to oil flows from a region responsible for approximately one-third of global oil production.
However, US President Donald Trump faces the possibility of alienating voters before the midterm elections later this year should escalating crude prices lead to higher gasoline costs for consumers. Negotiations between the involved parties have so far been inconclusive. Tehran claimed to have reached a “general agreement” with Washington regarding the terms of a possible nuclear accord.
According to RBC Capital Markets analysts, including Helima Croft, “The failure to resolve core areas of contention continues to tip the scales in favour of another military confrontation.” The US has also implemented visa restrictions on Iranian officials and executives in response to recent protest crackdowns.
