By Laila Kearney Feb 20 - Oil prices were higher on Friday as concern of conflict between the U.S. and Iran ratcheted up, with Washington saying Tehran will suffer if it does not agree a deal about
Brent Crude Sees Gains Amid US-Iran Tensions
By Erwin Seba
HOUSTON, Feb 20 (Reuters) - Brent crude prices rose in late-day short-covering on Friday as investors worried about U.S. military action, as President Donald Trump presses the Islamic Republic to halt nuclear weapon development.
Market Reactions and Price Movements
Brent crude futures settled at $71.76 a barrel, up 10 cents, 0.14%. U.S. West Texas Intermediate crude finished at $66.39 a barrel, down 4 cents, 0.06%.
For most of Friday, Brent and WTI were down, with the market awaiting developments in the struggle between Iran and the U.S.
"We're caught in between anticipation what's going to happen with the U.S. and Iran and denial an attack's going to happen," said Phil Flynn, senior analyst with Price Futures Group.
Impact of US Tariffs and Supreme Court Decision
The oil market shrugged off a U.S. Supreme Court decision ruling unconstitutional Trump's use of a law to levy tariffs in national emergencies, Flynn said.
"The tariffs decision didn't seem to move us too much," he said. "I think there is a sense the tariffs are going to get done another way."
Over the week, Brent and WTI were both up more than 5%.
US-Iran Relations and Oil Market Implications
Trump said this week that "bad things" would happen to Iran if there was not a deal to end the Islamic Republic's development of nuclear weapons.
Iran's foreign minister said on Friday he expected to have a draft counterproposal ready within days following nuclear talks this week as Trump said he was considering limited military strikes.
BETTING ON HIGHER PRICES
Geopolitical Factors Influencing Oil Prices
Iran, a major oil producer, lies opposite the oil-rich Arabian Peninsula across the Strait of Hormuz, through which about 20% of global oil supply passes. Conflict in the area could limit oil entering the global market and push up prices.
"We're waiting for a potential binary outcome, if we should take Trump's words at face value," said Ole Hansen, head of commodity strategy at Saxo Bank. "The market is nervous, it's going to be a wait-and-see day."
Traders and investors ramped up purchases of call options on Brent crude in recent days, betting on higher prices, Saxo Bank analysis shows.
Supply and Demand Dynamics
Also supporting oil were reports of falling crude stocks and limited exports in the world's biggest oil-producing and exporting countries.
U.S. crude inventories dropped by 9 million barrels as refining utilisation and exports climbed, an Energy Information Administration report showed on Thursday. [EIA/S]
Markets were also considering the impact of ample supply, with talks of OPEC+ leaning towards a resumption in oil output increases from April.
The oil surplus that was evident in the second half of 2025 continued in January and is likely to persist, JP Morgan analysts Natasha Kaneva and Lyuba Savinova said in a note.
"Our balances continue to project sizeable surpluses later this year," they said, adding that output cuts of 2 million barrels per day would be needed to prevent excess inventory builds in 2027.
(Reporting by Erwin Seba, Anna Hirtenstein in London, Laila Kearney in New York and Trixie Yap in Singapore;Editing by Elaine Hardcastle, David Goodman, Diane Craft and David Gregorio)
