Oil Holds Firm Close to Half-Year Peak as Trump Imposes Iran Deadline

Oil Prices Hold Steady Amid Rising Tensions in the Middle East

Crude oil prices remained close to their highest levels in half a year as President Donald Trump declared that Iran has a maximum of 15 days to reach an agreement regarding its nuclear activities. Meanwhile, the United States has significantly increased its military presence in the Middle East.

Brent crude hovered around $72 per barrel after a surge of over 6% in the previous two days, while West Texas Intermediate was near $67. President Trump indicated that negotiations with Iran would not extend beyond 10 to 15 days, fueling concerns about potential disruptions to the global oil market.

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The United States has initiated its largest military deployment in the Middle East since 2003, ahead of the Iraq war. This escalation suggests the possibility of a broader campaign, surpassing last June's limited strike on Iran’s nuclear facilities. According to the Wall Street Journal, the administration is also considering a smaller-scale operation to pressure Iran into negotiations.

"We believe this is more about increasing pressure than imminent military action," commented Robert Rennie, head of commodity research at Westpac Banking Corp.

Iran, a key OPEC producer, supplies over 3 million barrels of oil daily—about 3% of the world’s total output—with China as its primary customer. The greatest threat to oil prices would be if Iran attempted to block the Strait of Hormuz, a vital passageway for energy exports from the Persian Gulf.

This year, oil prices have climbed by roughly 16% as traders focus on regional supply risks, overshadowing previous forecasts of a surplus that had depressed prices at the end of 2025. A prolonged conflict with Iran could drive prices even higher, potentially increasing gasoline costs for American consumers and creating political challenges ahead of the upcoming midterm elections.

The head of the United Nations’ nuclear agency warned that Iran’s opportunity to reach a diplomatic solution regarding its nuclear program is rapidly diminishing. The agency has been in talks with Tehran about inspecting sites targeted in last year’s attacks.

Market volatility is also evident in oil options trading, where bullish call options have commanded significant premiums over puts for much of the year. On Wednesday, contracts representing 10 million barrels of Brent June $100 calls were traded, reflecting traders’ concerns about possible price spikes.

Additional Market Developments

Supporting the upward trend, US crude inventories dropped by 9 million barrels—the largest decrease since early September—according to the Energy Information Administration. Inventories of refined oil products also saw declines across all categories.

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