Oil prices climbed more than 1% after fresh reports of escalating tensions in Iran, sending traders to the brink of a supply scare. The uptick pushed West Texas Intermediate above $80 a barrel, sparking renewed interest in geopolitical risk as a key driver of market swings.

Meanwhile, analysts warn that U.S. crude inventories have fallen sharply, tightening the supply curve. The Energy Information Administration projects a draw of 2.5 million barrels this week, a drop that could sustain higher prices if the geopolitical flashpoint persists in the near term.

Investors now weigh the dual impact of a tightening supply and a volatile geopolitical backdrop. Energy majors are adjusting hedging strategies, while traders eye futures for potential rebounds. Market watchers expect further data releases to clarify whether the rally will endure.

Analysts suggest that if U.S. inventories continue to dip, the price ceiling could rise, prompting a reassessment of supply forecasts. Meanwhile, diplomatic developments in Tehran may either calm markets or trigger a sharper spike, keeping the sector on a knife‑edge.