Oil prices extended gains on Thursday, February 19, as signs of conflict between the US and Iran sparked worries of possible supply disruptions.
The US and Iran sought to defuse tensions during negotiations over Tehran’s nuclear programme, even as both nations stepped up military activity in the key oil-producing region.
Brent crude futures rose 17 cents, or 0.24%, to $70.52 per barrel, while US West Texas Intermediate (WTI) crude advanced 28 cents, or 0.4%, to $65.47 per barrel during Asian trading hours.
Both benchmarks ended Wednesday with gains of over 4%, marking their strongest settlements since January 30, as traders factored in possible supply disruptions driven by rising tensions between the US and Iran.
Back home, crude oil prices on the Multi Commodity Exchange (MCX) also rose 0.58% to ₹5,946 on Thursday, compared to the previous close of ₹5,913.
Why are oil prices rising?
A major risk currently facing the oil market is that any escalation in tensions could disrupt shipping through the Strait of Hormuz.
The Middle East accounts for nearly 30% of global oil production, and about 20% of the world’s crude supply passes through the Strait of Hormuz, making the region strategically critical, said Tushar Badjate, Director of Badjate Stock & Shares. Even minor disruptions or strong geopolitical rhetoric can move prices sharply, he cautioned.
According to a report by Reuters, little progress was made in nuclear discussions held in Geneva this week between the United States and Iran. However, major differences persist, the report said, noting that Tehran is expected to return with additional proposals in the coming weeks.
Iran also issued a notice to airmen (NOTAM) announcing planned rocket launches over its southern regions on Thursday between 0330 GMT and 1330 GMT, according to the website of the Federal Aviation Administration.
Meanwhile, the United States has positioned warships near Iran, with Vice President JD Vance stating that Washington is weighing whether to continue diplomacy or consider alternative measures, according to the Reuters report.
Iranian state media said that there had been a temporary shutdown of the Strait of Hormuz for several hours on Tuesday, without confirming whether full operations had resumed.
Meanwhile, two days of peace negotiations between Ukraine and Russia concluded in Geneva on Wednesday without progress, with President Volodymyr Zelenskiy accusing Moscow of delaying US-backed efforts to end the four-year conflict.
Crude oil prices near-term outlook
Analysts expect a flare-up in tensions to drive crude oil prices further, but a sharp fall in case of any diplomatic progress cannot be ruled out.
Brent crude has seen swings of 3–5% in a single session, reflecting how sensitive markets are to developments, said Bajate. “Any escalation that threatens supply routes could push prices higher, potentially impacting inflation, currency movements, and overall market sentiment. Investors should remain cautious and prepared for short-term fluctuations,” he advised.
Crude Compass report by Choice Institutional Equities said that if tensions de-escalate or diplomatic progress occurs, the risk premium could unwind, pulling prices down. The report further noted that an escalation may lead to further spikes in oil prices from the current levels. For prices to stay elevated, there needs to be a permanent disruption to supply, which is not yet the case.
“The length of discussions between Russia and Ukraine has so far resulted in 140 million barrels of Russian crude at sea. This will continue to increase till the time negotiations continue and might only result in a sharper fall in oil prices, provided there is a peace deal. Overall, we continue to expect Brent to average at USD 61.5/b in 2026 in the backdrop of increased competition as a result of (a) relentless supply of oil from the US, (b) gradual unwinding of cuts by OPEC+, and (c) possible removal of sanctions,” the report said.
(With inputs from Reuters)
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
