US Federal Reserve Chair Jerome Powell on Wednesday suggested oil volatility is not having a material impact on the US economy.
Mr Powell was pressed on geopolitical risks after the Fed held interest rates steady at about 3.64 per cent. Geopolitical risks were flagged as one of the top near-term risks to financial stability, according to the Fed's most recent financial stability report, published in December.
When asked about geopolitical risks, Mr Powell said “a lot of it is around energy, oil”.
Developments in Iran and Venezuela this year have led to a new bout of volatility in the oil markets.
Prices increased on Wednesday after US President Donald Trump warned a “massive armada” was on its way towards Iran, amid heightened tension between Washington and Tehran. In a post on Truth Social, he said “time is running out” for Iran to negotiate a nuclear agreement.
Brent, the global benchmark for crude, was trading 1.68 per cent higher at $68.71 a barrel as of 5.16pm ET (2.16am GST). West Texas Intermediate, which measures US crude oil, was up 1.12 per cent at $63.51 a barrel.
In his social media post, Mr Trump said the “armada” led by the USS Abraham Lincoln carrier strike group is a “larger fleet” than the one that Washington sent to the Caribbean before it captured Venezuelan President Nicolas Maduro this year.
Industry experts have previously said the incident would probably have a limited impact on oil prices.
