OPEC+ demand offsets Middle East risks: oil prices surge past $69 amid Iran tensions

Oil prices surged more than 4% on Wednesday, reaching their highest levels in over two months amid escalating tensions between the U.S. and Iran.

The spike was driven by Iran's Defense Minister Brigadier General Aziz Nasirzadeh's warning that "all U.S. bases in the region are within our reach" and Tehran's readiness to target them if conflict erupts.

The U.S. responded by ordering a partial evacuation of its embassy in Iraq and allowing military families to leave, heightening concerns over regional security. West Texas Intermediate crude futures jumped 4.9% to settle above $68 a barrel, marking the largest gain since October.

President Donald Trump expressed growing skepticism about reaching a nuclear deal with Iran, stating he is "less confident now than I would have been a couple of months ago" that Tehran would halt uranium enrichment.

Despite these geopolitical risks, oil prices are supported by robust demand within OPEC+ countries, particularly Saudi Arabia, which could offset additional supply in the coming months.

Rebecca Babin, senior energy trader at CIBC Private Wealth Group, noted, "Iranian rhetoric has turned notably more hostile, and these threats are being substantiated by real-world developments."

The complex situation is further intensified by the potential for Israeli military action if negotiations fail, keeping traders cautious but prices elevated.

Brent crude futures settled at $69.77 a barrel, up $2.90 or 4.34%, while U.S. West Texas Intermediate crude gained $3.17 or 4.88%, closing at $68.15.

The ongoing sanctions on Iran continue to curtail its oil supplies, adding to market tightness amid geopolitical uncertainty.

Overall, the combination of heightened Middle East risks and strong OPEC+ demand dynamics is driving oil prices higher, reflecting market concerns over supply disruptions and regional instability.

Oil prices surged over 4% Wednesday, topping $69 a barrel amid escalating U.S.-Iran tensions and Iran’s threats to target U.S. bases. OPEC+ demand, especially from Saudi Arabia, is expected to offset supply concerns, supporting prices despite regional risks and U.S. embassy evacuations in Iraq.