Oil prices are hovering near seven-month highs as traders weigh the outcome of the next round of diplomatic talks between the U.S. and Iran, scheduled for Thursday, with a potential military action threatening to disrupt global supply.
Global benchmarks Brent and WTI futures were up around 0.6% during Tuesday’s session, trading at $71.20 per barrel and $66.01 a barrel at 04:00 GMT. Last Friday, Brent prices reached their highest level since July 2025, while WTI is closing in on the August peak.
U.S. and Iran Set for Crucial Talks in Geneva
Both contracts are holding near these highs as the U.S. has positioned its military forces in the Middle East to compel Iran to negotiate an end to its nuclear and ballistic missile programme and economic sanctions.
Iran is the third-largest crude oil producer in the Organization of the Petroleum Exporting Countries (OPEC), which includes other Middle Eastern powerhouses like Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq. But a conflict could disrupt supplies from the key production region.
“This uncertainty means the market will continue to price in a large risk premium and remain sensitive to any fresh developments,” strategists at ING Commodities said on Wednesday.
Prices have somewhat stabilized since Monday after Tehran signalled there still could be a chance of a diplomatic solution amid the tense discussions. U.S. envoys Steve Witkoff and Jared Kushner are slated to meet with the Iranian delegation led by Foreign Minister Abbas Araqchi in Geneva, either directly or indirectly via mediation by Oman’s Foreign Minister Sayyid Badr bin Hamad Al Busaidi.
Abbas Araqchi said on Tuesday that a deal with Washington was “within reach, but only if diplomacy is given priority.”
IG Market analyst Tony Sycamore wrote in a note that President Trump has warned of “very bad consequences” if a deal cannot be reached, but whether Iran’s concessions will meet America’s “zero nuclear enrichment” red line remains to be seen.
Iran-China Missile Talks Intensify as U.S. Crude Inventories Climb 11.43M Barrels
Amid the tense environment, reports indicate that Tehran and Beijing have accelerated talks to purchase Chinese anti-cruise missiles, which analysts say could enhance Iran’s strike capabilities to target the U.S. naval forces that have assembled near the country’s coastline.
Meanwhile, the American Petroleum Institute reported a massive increase in U.S. oil stockpiles, with 11.43 million barrels added in the week ended February 20. However, gasoline and distillate inventories fell. Official U.S. oil inventory data from the Energy Information Administration (EIA) is due later on Wednesday and could influence near-term price direction.
Moreover, the U.S. Supreme Court’s decision to strike down Trump’s retaliatory tariffs has renewed concerns about global trade. Speculators have already fled to safe-haven assets like gold and silver, leaving riskier assets like crude oil.
In retaliation, the President imposed a new 15% “global tariff,” which is expected to be a backburner for the rest of the week as the U.S. and Iran prepare for a crucial round of talks in Geneva tomorrow.
Analysts are forecasting $100 per barrel for oil ahead of the talks. Speaking to Bloomberg on Monday, Fereidun Fesharaki, chairman emeritus at energy market consultancy FGE NexantECA, said price spikes to $90 – $100 per barrel are “within reach” as the situation heats up.
