Oil Whiplashes Up As U.S. Military Is Reportedly Poised To Stoke Iran Regime Change

Meanwhile, Kazakhstan announces plans for full Tengiz recovery next week: File Image/Pixabay

The very same geopolitical circumstances that caused oil earlier in the week to jump 2 percent and then decline in the following session prompted traders on Thursday to push the commodity to an over 3 percent gain, as they contemplated a possible attack on Iran by the U.S. military.

After multiple sources told media that U.S. president Donald Trump is considering targeted strikes on Iran's security forces and leaders, West Texas Intermediate settled up $2.21, or 3.5 percent, at $65.42 per barrel.

Brent settled up $2.31, or 3.3 percent, at $70.71 per barrel; both benchmarks are now technically in overbought territory.

The sources said that the proposed Iranian strikes would be intended to inspire protesters and bring about a regime change, and Trump on Wednesday warned the Islamic republic's leaders that "The next attack will be far worse! Don't make that happen again."

John Evans, analyst at PVM, said, "The immediate [market] concern ... is the collateral damage done if Iran takes a swing at its neighbours or possibly even more tellingly, it closes the Strait of Hormuz to the 20 million barrels per day of oil that navigates it."

Citi analysts said in a note that further geopolitical escalation could push Brent prices to as high as $72 per barrel over the next three months.

Meanwhile, an unexpected development occurred in another part of the world when the Kremlin revealed on Thursday that Russia  repeated its invitation for Ukrainian president Volodymyr Zelenskiy to come to Moscow for peace talks.

Also, conflicting news regarding Kazakhstan's giant Tengiz oilfield, which was forced to close due to a fire and power outage, continued: earlier in the week, sources told media that Tengiz will likely restore less than half its normal production by February 7.

On Thursday, Kazakhstan said Chevron would take measures to ensure the reliable and safe operation of the facilities, with the aim of reaching full production in a week.