Global oil prices extended gains for a second consecutive day as Middle East tensions escalated, with Iran at the center of geopolitical concerns. The market reacted to rising risks in a region critical to global energy supplies, pushing prices higher as investors priced in potential supply disruptions.

The risk premium built into oil prices reflects market anxiety about potential conflicts involving Iran, a major OPEC producer with significant influence on global oil markets. When instability threatens oil-producing regions, traders typically anticipate supply constraints, leading to price increases even without immediate physical supply issues.

Energy markets remain sensitive to geopolitical developments in the Middle East, where approximately one-third of globally traded oil passes through strategic waterways. Companies that rely on oil as input costs face margin compression, while energy producers benefit from stronger pricing power in this environment.

Oil prices currently reflect both fundamental supply-demand dynamics and geopolitical risk factors, with Iran's position as OPEC member adding complexity to market calculations. The two-day advance suggests traders believe tensions warrant closer monitoring beyond immediate price impacts.