Crude Oil Prices Rally Amid Ongoing US-Iran Conflict and Disruptions to Russian Production

Crude oil prices settled higher on Thursday after a Wall Street Journal report said the US has no interest in returning to the terms of the deal it signed with Iran in June, casting doubt on oil flows from the Middle East returning to normal anytime soon.

The US-Iran conflict is putting pressure on crude supplies, and the recent escalation of tensions between Russia and Ukraine could further disrupt Russian crude production. According to a Bloomberg News report, Russia is preparing to escalate attacks on Ukraine after concluding that negotiations for a peace deal have reached a dead end.

Crude prices had dropped more than 8% this week to a two-week low amid signs of easing Middle East tensions and larger supplies of crude moving through the Strait of Hormuz. However, the US Treasury Secretary warned that any country doing business with Iran risks facing US sanctions, which could limit crude supplied from the Middle East.

The International Energy Agency (IEA) said in its monthly report that the global oil supply deficit will worsen, even as oil demand is taking a hit from the war and high prices. The IEA also noted that global oil inventories will fall at twice the previously estimated rate because of ongoing disruptions from the US-Iran war.