Crude oil prices advanced as military forces from the United States and Iran appeared to confront each other in maritime and aerial domains, intensifying concerns over an escalation of tensions.

WTI settled above $63 per barrel after an Iranian drone approached a U.S. aircraft carrier in the Arabian Sea and was shot down. This incident prompted the return of some geopolitical risk premium, which had previously faded as Washington adopted a softer stance toward Tehran.

White House Press Secretary Caroline Levitt stated that U.S. President Donald Trump intends to prioritize diplomacy in handling relations with Iran, causing crude futures to pare some of their gains. However, in post-settlement trading, oil prices moved higher, at one point rising by 3.3%.

Just hours earlier, a tanker involved in the U.S. military's fuel procurement program was hailed by several small armed vessels while transiting the Strait of Hormuz, indicating a renewed increase in risks for maritime traffic in the region.

Gregory Brew, a geopolitical analyst at Eurasia Group, noted that these events highlight that the U.S. recent pivot to diplomacy regarding Iran is not motivated by a desire to de-escalate tensions, but rather by an assessment that it possesses sufficient leverage to compel Tehran to make concessions on the nuclear agreement and other demands. He estimates that current oil prices contain a risk premium of $3 to $5.

WTI March futures rose 1.7%, settling at $63.21 per barrel.

Brent April futures settled 1.6% higher, at $67.33 per barrel.