WTI climbs above $72.00 on heightened geopolitical tensions in the Middle East

• WTI price rises to $72.05 in Friday’s early Asian session, up 6.20% on the day.

• Heightened geopolitical tensions in the Middle East support the WTI price. 

• Trump’s tariff threats and uncertainty could undermine the WTI price. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $72.05 during the Asian trading hours on Friday. The WTI price climbs to the highest level since February after Israel carried out airstrikes against targets in Iran, raising fears of escalating geopolitical tensions in the region. 

Late Thursday, Israeli Defense Minister Israel Katz said there had been a “preemptive strike against Iran” and declared a state of emergency as the country prepared for retaliation. Israel's Prime Minister Benjamin Netanyahu said early Friday that Israel struck at the heart of Iran's nuclear enrichment program and nuclear weaponization program. Netanyahu also targeted Iran’s main enrichment facility in Natanz, adding that the operation will continue for as many days as it takes. 

Fresh confrontations in the Middle East, the region that accounts for a third of global crude production, raise the fears of geopolitical risks and boost the WTI price. “We are back in an environment of heightened geopolitical uncertainty, leaving the oil market on tenterhooks and requiring it to start pricing in a larger risk premium for any potential supply disruptions,” said Warren Patterson, head of commodities strategy at ING Groep NV.

On the other hand, the latest tariff threats from US President Donald Trump might weigh on the WTI price. Trump said that the trade deal with China is ‘done,’ but details and confirmation from China were lacking. Additionally, Trump stated that he intends to send letters to dozens of US trading partners in the next one to two weeks, setting unilateral tariffs ahead of the July 9 deadline that came with his 90-day pause.

Oil traders will closely monitor the developments surrounding US-China trade talks. Economic uncertainty triggered by Trump’s tariff policy could drag the WTI lower. Later on Friday, the advanced US Michigan Consumer Sentiment will be the highlight.