Tensions between the US and Iran and an unexpected drop in inventories pushed oil prices up by 4%, then slightly increased.

Investing.com - On Thursday during Asian trading hours, oil prices edged higher, after a surge of over 4% in the previous trading day. Ongoing tensions between the US and Iran, as well as lack of progress in Russia-Ukraine talks, provided support, along with a decline in US crude inventories.

As of 10:40 PM Eastern Time (3:40 AM Beijing Time), April-dated Brent crude futures rose 0.3% to $70.59 per barrel, while West Texas Intermediate (WTI) futures increased 0.4% to $65.45 per barrel.

Both contracts jumped more than 4% in the previous trading day, with gains exceeding $3.

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Due to the Lunar New Year holidays in several Asian markets, overall trading activity across Asia remains subdued.

Geopolitical tensions support oil prices

Investors continue to monitor risks in the Middle East, with tensions between Washington and Tehran intensifying, raising concerns over potential disruptions to oil flows through the Strait of Hormuz, a critical chokepoint for global energy trade.

Media reports indicate increased military and naval activity in the Gulf region, reinforcing market fears of supply vulnerabilities.

Meanwhile, hopes for easing sanctions on Russian energy exports have been dashed after negotiations between Russia and Ukraine failed to make progress.

API data shows unexpected decline in US crude inventories last week

Further industry data supports the tightening US supply situation.

The American Petroleum Institute reported that US crude inventories fell by approximately 609,000 barrels for the week ending February 13, contrary to Reuters survey expectations of a 2.1 million barrel increase, and reversing a significant build of over 13 million barrels the previous week.

Inventory declines typically indicate increased refinery demand or supply constraints, both of which are bullish for oil prices.

Official government data from the US Energy Information Administration will be released later Thursday for confirmation.

Investors remain cautious about the outlook for global demand and further monetary tightening by major economies, which could suppress fuel consumption.

The Federal Reserve’s latest policy meeting minutes show disagreements among officials over whether further rate hikes are necessary.

Policy makers generally see inflation risks as still tilted to the upside, but there are differences on how strict policy should become and how long rates should stay high.

Investors are now awaiting the release of the US Personal Consumption Expenditures (PCE) Price Index data on Friday, the Fed’s preferred inflation measure, for clearer guidance on monetary policy.

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