US-Iran, Russia-Ukraine Tensions Drive Oil Surge

Andrew Lipow, president of Lipow Oil Associates, stated that geopolitics solely drove the price movements, with the market pricing in additional supply disruption risk. Hopes for easing US-Iran tensions, which caused a Tuesday price drop, dissipated after the Iranian semi-official Fars news agency reported Iran and Russia will conduct joint naval drills in the Sea of Oman and northern Indian Ocean.

Iran also temporarily shut parts of the Strait of Hormuz, a critical global oil supply route, for military drills. SEB chief commodities analyst Bjarne Schieldrop noted Iran's negotiation tactics, while political consultancy Eurasia Group assigned a 65% probability of US military strikes against Iran by April's end.

Separately, Ukraine President Volodymyr Zelenskiy accused Moscow of stalling US-mediated peace talks in Geneva, leading to concerns about potential renewed efforts to clamp down on Russian oil exports, which Again Capital partner John Kilduff believes would be supportive of prices. Analysts polled by Reuters expect US crude stockpiles to have risen last week.