Oil rose 1% as Middle East brinkmanship and robust US labour data spur buying

Crude oil futures settled higher on Wednesday, as the lingering threat of escalation between the United States and Iran outweighed the bearish impact of a significant build in US crude stockpiles. The market remains locked in a tug-of-war between supply fundamentals and geopolitical risk, with traders prioritising the latter amid renewed friction in the Middle East.

Brent crude oil futures settled 60 cents, or 0.87%, higher at $69.40 a barrel. 

WTI crude rose 67 cents, or 1.05%, to $64.63 a barrel.

Prices found support from a renewed fear premium after US President Donald Trump stated that "nothing definitive" had been decided regarding Iran. The uncertainty was compounded by comments suggesting Washington is considering deploying a second aircraft carrier to the region if a deal is not reached, a move traders interpreted as a signal that the negotiations remain fragile. Analysts noted that while actual disruptions have yet to materialise, the lack of a clear resolution is keeping a floor under prices.

Bullish sentiment was further underpinned by robust macroeconomic data, which helped alleviate demand-side concerns. The US Labor Department reported that job growth unexpectedly accelerated in January, pushing the unemployment rate down to 4.3%. Market participants viewed this as a signal of economic resilience, with Rystad Energy noting that a stable labour market "reinforces the view that the demand picture is firming up" for transport fuels and petrochemicals.

Written by: Aiman Haikal