Oil prices rose for a third straight session as investors weighed President Donald Trump's latest tariff threats against buyers of Russian crude, the impact of the Israeli strikes on Doha, and the prospect of a US interest rate cut.

Brent traded around $67 per barrel, extending this week's gains to more than 2%. US producer prices fell unexpectedly, strengthening the case for the Federal Reserve to cut borrowing costs, potentially helping support energy demand.

Trump told European Union officials he was willing to impose new tariffs on India and China, major importers of Russian crude, in an effort to encourage Moscow to negotiate with Ukraine—but only if EU countries did so too.

Meanwhile, Israeli strikes targeting Hamas leaders in Qatar's capital threatened to derail US-led efforts to end the Middle East conflict, reviving the geopolitical risk premium in crude prices. Israel has claimed full responsibility, while Trump distanced himself from the attacks.

Brent has been stuck between $65 and $70 for more than a month now, with expectations of a supply glut by the end of 2025 looming over the market, but the Israeli strikes have reignited concerns about escalating hostilities in the region. The Middle East is the source of about a third of the world's crude oil supply.

Prices have been forced to grapple with the competing forces of oversupply and geopolitical risk for the past two days.

On the one hand, Brent's prompt spread—the difference between its two nearest contracts—closed at its weakest level since February on Tuesday, excluding expiration days. The weakness reflects abundant supply in northwest Europe. A US government report on Tuesday suggested the supply glut is already here.

Conversely, the options market saw a slight increase in bullish call prices. Periods of heightened geopolitical risk are generally most evident in the options sector. "It's been three days since the OPEC production increase, yet prices continue to hold steady in the $65/$70 range," said Keshav Lohiya, founder of consultancy Oilytics. "On the other side of this bearish peak narrative is rising near-term geopolitical risk." (alg)

Source: Bloomberg