WTI crude oil futures advanced to approximately $65.5 per barrel on Thursday, building on the strongest single-session gain since late October as geopolitical risks once again dominated energy markets. The rally comes amid mounting speculation that US military intervention in Iran could unfold within weeks, adding fresh uncertainty to global supply expectations at a time when traders were previously focused on oversupply concerns and slowing demand growth.

Geopolitical Risk Reprices the Barrel

Market sentiment shifted sharply after reports suggested that any US military operation against Iran would likely involve a prolonged campaign rather than a limited strike. Israel’s government is reportedly advocating for a broader strategic outcome, potentially targeting regime change. Although diplomatic channels remain open, negotiations have produced little clarity. Tehran has described discussions with Washington as reaching a “general agreement” on a potential nuclear framework, yet US officials maintain that key red lines remain unresolved.

Vice President JD Vance signaled dissatisfaction with Iran’s concessions, while President Donald Trump reiterated that military force remains a viable option. For oil markets, the Strait of Hormuz — through which roughly a fifth of global oil flows — represents the critical chokepoint. Any credible threat to transit routes is quickly reflected in futures pricing, even before physical supply is disrupted.

Inventory Data Adds Mixed Signals

Beyond geopolitics, traders are digesting fresh supply data. Industry figures showed US crude inventories declined by 0.61 million barrels last week, partially offsetting the prior week’s 13.4 million-barrel surge — the largest increase since January 2023. The modest drawdown helped reinforce the bullish momentum but does not yet signal a sustained tightening trend.

The inventory volatility highlights a broader tug-of-war in the market. On one side, geopolitical fears and OPEC+ discipline are providing upward pressure. On the other, resilient US production and uncertain global demand, particularly in Europe and parts of Asia, continue to temper aggressive bullish positioning.

WTI settled near $65.38 per barrel on February 19, marking a 0.30% daily gain. Over the past month, crude has rebounded 8.32%, reflecting a partial recovery from earlier weakness. However, prices remain 9.79% lower compared to a year ago. Notably, crude reached an all-time high of $410.45 in December 2025 in the CFD-tracked benchmark, underscoring the extreme volatility that has characterized energy markets in recent years.

Strategic Implications for Investors

For institutional investors in both the US and Israel, the current environment demands careful risk calibration. Energy equities, inflation expectations, and currency dynamics — particularly the US dollar — are closely intertwined with oil’s trajectory. A sustained move above $70 could revive inflationary pressures and complicate Federal Reserve policy expectations, while a diplomatic breakthrough could swiftly erase the geopolitical premium embedded in prices.

The next catalysts will likely emerge from diplomatic updates and official inventory data from the Energy Information Administration. If tensions escalate further without a clear diplomatic off-ramp, risk premiums may expand. Conversely, evidence of de-escalation could shift focus back to underlying supply-demand fundamentals.