^{Photo: CNN}

Oil prices climbed sharply on Tuesday as geopolitical tensions surrounding Iran intensified, prompting investors to reassess supply risks in a market already sensitive to political shocks. The rally followed comments from U.S. President Donald Trump, who said he had canceled all meetings with Iranian officials and pledged support to protesters demonstrating across the country.

U.S. crude oil settled higher by $1.65, or 2.77%, closing at $61.15 per barrel. Brent crude, the global benchmark, gained $1.60, or 2.51%, to finish the session at $65.47 per barrel. The move marked one of the strongest single-day gains for oil this month, driven primarily by rising geopolitical uncertainty rather than changes in demand fundamentals.

Political escalation fuels market reaction

The price surge came after Trump publicly addressed the unrest in Iran, where large-scale demonstrations have been met with a heavy response from state security forces. Human rights groups and regional observers report that hundreds of protesters may have been killed, though the exact toll remains difficult to verify after authorities restricted internet access across the country.

Trump said he had suspended all diplomatic engagements with Iranian officials until the violence stops, reiterating previous warnings that the U.S. would not remain passive if protesters continue to be killed. In a series of statements, he framed the unrest as a pivotal moment for Iran and suggested consequences for those responsible for the crackdown.

Markets interpreted the remarks as a signal of potential U.S. intervention or tighter pressure on Tehran, both of which could affect Iran’s ability to export oil.

Supply risks back in focus

Iran is a key member of the Organization of the Petroleum Exporting Countries and remains one of the world’s major crude producers, with output capacity estimated at several million barrels per day. While U.S. sanctions already limit much of Iran’s official oil exports, any escalation that disrupts production, shipping routes, or regional stability could tighten global supply.

Energy analysts noted that the market reaction reflects concern not only about Iran itself, but also about broader Middle East stability. The region accounts for roughly a third of global oil supply, and past episodes of unrest have often triggered sharp price moves due to fears of spillover effects.

Traders are also watching whether renewed tensions could affect shipping through critical chokepoints such as the Strait of Hormuz, through which a significant share of the world’s seaborne oil passes each day.

Broader market implications

The rally in oil prices comes at a time when energy markets are balancing mixed signals. On one hand, global demand growth has moderated amid uneven economic data from major economies. On the other, spare production capacity remains concentrated among a small number of producers, making prices more vulnerable to geopolitical shocks.

Higher oil prices can have knock-on effects across the global economy, influencing inflation expectations, fuel costs, and central bank policy decisions. For energy producers, the move offers short-term support to revenues, while for consumers and import-dependent countries, sustained price increases could add pressure to already tight budgets.

As the situation in Iran continues to evolve, investors are likely to remain highly sensitive to political headlines. For now, oil markets are signaling that geopolitical risk has firmly returned to the forefront, with prices responding swiftly to any sign of escalation.

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