OIL gained as traders weighed whether talks between the US and Iran will be enough to avert conflict, following a report that American military intervention could come sooner than expected, reports Bloomberg.
West Texas Intermediate rose as much as 3.6 per cent to trade above $64 a barrel after Axios reported that any US military operation would likely be a weeks-long campaign, rather than the pinpoint operation that took place in Venezuela last month. Israel’s government is pushing for a scenario targeting regime change, the report added.
A potential conflagration would put crude flows at risk in the Strait of Hormuz – the choke point for energy exports from the world’s top oil-producing region that Iran said on Tuesday it would briefly close for military drills. US President Donald Trump risks angering voters ahead of mid-term elections this year if a spike in crude prices makes petrol more expensive at the pump.
“I’m a cynic and still don’t believe Trump would risk higher pump prices at home in an election year where affordability is high on the agenda,” said Ole Sloth Hansen, head of commodities strategy at Saxo Bank, adding the Axios report was driving up prices yesterday.
Talks so far have been inconclusive, with Tehran saying it reached a “general agreement” with Washington on the terms of a potential nuclear deal. A US official said Iranian negotiators would return to Geneva with a new proposal in two weeks.
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