Oil Maintains Gains Supported by Tensions in the Middle East

SadaNews - Oil prices maintained their gains for the second consecutive day, as tensions in the Middle East escalated, particularly those related to Iran, a member of the Organization of "OPEC," which has added a risk premium to prices.

Brent crude traded just below $69 a barrel, after rising more than 2% over the previous two sessions, while West Texas Intermediate crude stabilized around $64.

The United States stated on Monday that vessels flying the American flag should stay as far away as possible from Iranian waters while crossing the Strait of Hormuz, despite indications of progress in nuclear talks between Washington and Tehran.

The Strait of Hormuz is a vital maritime passage for energy shipments coming from the Middle East, connecting several major producers to global markets, particularly in Asia. Tehran has repeatedly threatened to close this maritime route during periods of geopolitical tension, yet it has not actually followed through on these threats.

Annual Gains Despite Supply Surplus Fears

Oil has risen more than 10% since the beginning of the year, as repeated waves of geopolitical tension have overshadowed concerns about a global supply surplus that could lead to increased inventories and pressure on prices.

A set of data is expected to provide new signals to traders about market conditions this week, starting with an update from the Energy Information Administration later on Tuesday.

Washington has assembled a significant military force in the Middle East while continuing to seek talks with Tehran regarding its nuclear ambitions, following a first round held in Oman last week, with expectations of additional rounds to be held.

This tension has raised fears that the United States may resort to striking targets inside Iran, which could disrupt oil flows, noting that the region accounts for about a third of global supplies.

Positive Outlook for the Talks... and Warnings About Prices

Analysts at "RBC Capital Markets" including Helima Croft noted in a research memo that "Washington and Tehran appear to have put a positive spin on the Oman talks, suggesting the possibility of additional discussions in the coming weeks."

They added that during a recent visit to the Gulf region, "several informed regional observers indicated that the fear of rising oil prices may ultimately push U.S. President Donald Trump to seek a negotiated settlement."

Data tracking vessels in recent days has shown that some operators of very large oil tankers, concerned about rising tensions between the U.S. and Iran and the risks to navigation in the Strait of Hormuz, have accelerated their ships' transit through the waterway.

U.S. Emphasis on the "Shadow Fleet"

In another development, U.S. forces boarded a ship linked to Venezuela in the Indian Ocean on Monday, expanding the geographic scope of Washington's campaign against the "shadow fleet" used to export sanctioned oil.

The United States detained Venezuelan President Nicolas Maduro last month and took control of the country's oil sector.

Optimistic Outlook for Commodities

Jeff Currie from "Carlyle Group" believes that oil, along with metals, remains "under-invested" and has significant upside potential, noting that the prevailing narrative about a surplus in oil supply is exaggerated.

Currie, the Chief Strategist for Energy Pathways at "Carlyle," stated in an interview with Bloomberg TV: "If you find yourself having to dig through data for evidence of a surplus, that simply means there is no real surplus in oil supply."

As of 1:59 PM Singapore time, April Brent crude futures fell 0.3% to $68.84 a barrel, while March West Texas Intermediate crude futures dropped 0.4% trading at $64.11 a barrel.