Oil prices experience spike amid Trump’s renewed Iran threat, Kazakh oilfield fire

Oil prices climbed amid renewed concerns over potential supply disruptions after US President Donald Trump warned that an “armada” was moving toward Iran.

After falling by around 2% in the previous session, oil markets reversed course when trading opened on January 23, as recorded by commodity price monitoring sites. 

International benchmark Brent crude futures for March delivery rose 1.8% to $65.20 per barrel, while US West Texas Intermediate futures for the same month were also up 1.8% at $60.44. By contrast, Azerbaijan’s domestic benchmark, Azeri Light, edged lower by 0.8%.

“We’re watching Iran,” Trump told reporters aboard Air Force One the day before. “You know we have a lot of ships going in that direction just in case. We have a big flotilla going in that direction and we’ll see what happens.”

The US president also reiterated his demand that Tehran refrain from restarting its nuclear program, echoing remarks he made earlier in the week at the World Economic Forum.

Last week, Trump appeared to soften his stance on possible military action against Iran, telling reporters he had been informed by “very important sources” in Tehran that “the killing has stopped.”

However, Trump’s latest warning, combined with a reported buildup of US naval forces in the Gulf, has put energy market participants on edge, as American media reports show. 

Iran, a member of OPEC, plays a significant role in global oil supply, producing more than 3 million barrels of oil per day.

Last year, Iran weighed the possibility of shutting down the Strait of Hormuz following US attacks on its nuclear facilities. While analysts see a low likelihood of a full closure, such a scenario could push oil prices up by $10 to $20 per barrel. The waterway linking the Persian Gulf to the Arabian Sea, is widely regarded as one of the world’s most critical oil chokepoints.

Additional volatility in oil prices has been driven by a fire at Kazakhstan’s Tengiz oilfield over the weekend, which remains shut down at the time of this reporting. The blaze damaged a key power generation and distribution facility, prompting a halt to production and exports at both Tengiz and the nearby Korolev oilfield, according to Kazakh authorities. Prior to the shutdown, Tengiz was producing about 360,000 barrels per day of crude oil. 

The disruption at the supergiant field helped lift Brent crude prices above $65 per barrel this week. Tengizchevroil, the operator of the Tengiz oilfield, is managed by a consortium led by U.S. energy major Chevron, which holds a 50% stake.

By Nazrin Sadigova