Oil prices surge! Is a U.S. military action against Iran "imminent"? Iran and Russia will conduct joint military exercises!

Today is the third day of the Lunar New Year, a day to welcome the God of Fortune. Wishing everyone good luck one after another and smooth blessings!

First, let’s look at the performance of the overseas markets.

As of the close, spot gold prices rose by 2.08%, to $4,979.56 per ounce, and COMEX gold futures increased by 1.95%; spot silver prices rose by 5.04%, to $77.2335 per ounce, and COMEX silver futures increased by 4.92%; COMEX copper futures rose by 2.40%, to $5.8410 per pound; spot platinum prices increased by 3.36%; spot palladium prices rose by 1.81%.

The three major U.S. stock indexes closed higher: Dow Jones up 0.26%, Nasdaq up 0.78%, and S&P 500 up 0.56%. In individual stocks, Micron surged over 5%, while Amazon, Nvidia, Oracle, and Netflix each rose over 1%.

By the end of the day, light crude oil futures for March delivery on the New York Mercantile Exchange rose by $2.86 per barrel, closing at $65.19 per barrel, a gain of 4.59%; Brent crude oil futures for April delivery in London rose by $2.93 per barrel, closing at $70.35 per barrel, a gain of 4.35%.

US Media: Military Action Against Iran “Imminent”

According to Xinhua News Agency citing Axios News on the 18th, there are currently no signs that diplomatic negotiations between the US and Iran will break through. Meanwhile, increasing evidence suggests that US military action against Iran is “imminent.”

The report quotes sources saying that if the US launches military action against Iran, it is likely to be a large-scale operation lasting several weeks. The US and Israel are likely to act jointly, with a scale much larger than the “June 12 War” last year, posing a more “existential threat” to Iran and having far-reaching regional impacts.

Israeli Official: US Military Strike on Iran “Timeline Shortening”

According to CCTV, on the 18th local time, a senior Israeli official stated that the “timeline for US military strikes on Iran is shortening.” Due to the lack of substantive progress in the new round of US-Iran negotiations, Israel assesses that US President Trump is very likely to approve attack plans in the near future.

The senior Israeli official confirmed that if the US launches an attack, Israel will join the military action against Iran. Although the operations may not be fully synchronized, the military coordination between the two countries is currently at a very high level.

Israel’s military and security agencies have now fully raised their alert levels. The Israel Defense Forces and other emergency agencies have received clear instructions: “Prepare for war.” Israel assesses that once the US and Israel launch a large-scale attack, Iran is very likely to retaliate with long-range missiles targeting Israeli territory.

Iran and Russia to Conduct Joint Naval Exercises

According to Xinhua citing the Islamic Republic News Agency on the 18th, Iran and Russia will hold joint military exercises on the 19th in the Oman Sea and northern Indian Ocean waters.

Hassan Magsudlu, spokesperson for the joint military exercise, said that this exercise reflects Iran and Russia’s concern over the current situation in the Oman Sea and northern Indian Ocean, demonstrating their commitment to strengthening maritime cooperation, opposing unilateralism, and maintaining regional maritime trade security.

On the 18th, Iranian President Ebrahim Raisi met with visiting Russian Energy Minister Nikolai Shulginov.

Raisi stated that Iran is determined to quickly and accurately implement the comprehensive strategic cooperation plan between the two countries and to promote their cooperation to achieve a leap forward.

US, Russia, and Ukraine Geneva Tripartite Talks Conclude

According to Xinhua, Ukrainian President Zelensky said on the 18th that during the two-day Geneva tripartite talks, Ukraine, the US, and Russia showed a constructive attitude on military issues, but disagreements remain on political matters.

Zelensky mentioned that political issues involve sensitive topics such as territory and the Zaporizhzhia nuclear power plant. While some progress was made, the negotiations were not smooth, and differences still exist among the parties.

According to TASS, citing sources, all rounds of the tripartite talks have now concluded, and no documents were signed during the talks from the 17th to the 18th.

Russian delegation leader Meginzki said the negotiations lasted two hours and described them as “difficult but pragmatic.” He added that the next round of talks will be held soon, but did not specify the date or location.

White House Press Secretary Karine Jean-Pierre said on the 18th that Russia and Ukraine made “substantive progress” during the US-Russia-Ukraine tripartite talks in Geneva, and another round of talks will be held in the future.

Analysts: Oil Price Fluctuations Mainly Centered on Iran’s Oil Supply Risks

Regarding the main logic behind current oil price fluctuations, Wang Yilu, senior researcher at Donghai Futures Research Institute, stated that it still revolves around Iran’s oil supply risks. Recently, the second round of US-Iran talks concluded without an agreement, and the US has sent a second carrier strike group to the Middle East, with reports of Iran conducting exercises in the Strait of Hormuz, causing geopolitical oil premiums to rise temporarily. However, these exercise reports were later denied, and both sides expressed willingness to continue negotiations after the second round. Additionally, the IEA report’s bearish supply and demand outlook eased some market supply concerns. Ongoing Russia-Ukraine negotiations also contributed to the decline in oil prices.

Economies.com analyst noted that WTI crude oil prices have recently declined in intraday trading, with a break below the key upward trend line intensifying selling pressure. Oil prices remain under pressure below the 50-day moving average, reinforcing negative market sentiment and limiting short-term rebounds. In contrast, Brent crude oil futures show a sideways consolidation pattern, with the critical support at $66.95 per barrel remaining solid.

Regarding future oil price directions, Wang Yilu believes that the outcome of US-Iran negotiations remains crucial. Until an agreement is reached, oil prices are likely to stay relatively stable with continued volatility.

“Geopolitical risks, supply-demand changes, and macroeconomic resonances will continue to be the main influencing factors in the market,” Wang said. On the geopolitical front, if core disagreements between the US and Iran persist, incidents such as oil tanker seizures, military clashes, or increased sanctions could continue to occur during negotiations, pushing up geopolitical premiums. Although the probability of a peace agreement in the short term between Russia and Ukraine is slim, India’s suspension of Russian oil purchases is a key market factor. Future US actions against shadow fleets may lead India to continue suspending Russian oil imports.

Wang also noted that in the short term, supply and demand in the spot market show slight increases in North Sea and Middle Eastern benchmarks, with physical premiums rising to around $2 and $1 per barrel respectively, though trading volumes have slightly declined. West African cargo sales remain under pressure, with a long-term oversupply outlook still in place. OPEC+ may continue increasing quotas in Q2, and the battle over oil output and prices will remain a focus. Additionally, long positions in Brent and WTI have been gradually increasing recently, which could lead to greater price volatility.

Wang further stated that market expectations for a rate cut or balance sheet reduction by the Federal Reserve’s next chair could also trigger risk asset reactions. Currently, oil prices are mainly driven by geopolitical factors, but as OPEC+ increases output, changes in supply-demand expectations, fund flows, and macro factors will gradually amplify risks.

(Source: Futures Daily)