Oil Prices Hold Near Seven-Month Peak as U.S.–Iran Talks Loom
Oil prices edged higher on Wednesday, as investors weighed the threat of military conflict between the U.S. and Iran that could disrupt supply and a big build in U.S. crude inventories.
Brent futures were up 6 cents at $70.83 per barrel at 0957 GMT. WTI futures rose 4 cents to $65.67 per barrel.
Brent prices reached their highest since July 31 on Friday, while WTI hit its highest since August 4 on Monday, as the U.S. positioned military forces in the Middle East to try to compel Iran to negotiate an end to its nuclear and ballistic missile programme.
An extended conflict could disrupt supplies from Iran, the third-biggest crude producer in the Organization of the Petroleum Exporting Countries, and other countries in the key Middle East producing region.
Supporting oil prices, U.S. President Donald Trump briefly laid out his case for a possible attack on Iran in his State of the Union speech on Tuesday, saying he would not allow a country he described as the world’s biggest sponsor of terrorism to have a nuclear weapon.
“This uncertainty means the market will continue to price in a large risk premium and remain sensitive to any fresh developments,” ING commodities strategists said on Wednesday.
U.S. envoys Steve Witkoff and Jared Kushner are due to meet an Iranian delegation for a third round of talks on Thursday in Geneva.
Iran’s Foreign Minister Abbas Araqchi said on Tuesday that a deal with the U.S. was “within reach, but only if diplomacy is given priority”.
“Trump has warned that without a deal, there will be ‘very bad consequences’. Whether (Iran’s) concessions will meet the U.S.’s ‘zero enrichment’ red line remains to be seen,” Tony Sycamore, IG market analyst, said in a note.
Amid the heightened tensions, Iran has accelerated talks to purchase Chinese anti-ship cruise missiles, according to Reuters sources, which could target the U.S. naval forces that have assembled near the Iranian coast.
While geopolitical tensions have supported prices, the market is also contending with concerns of large inventory gains as global supply exceeds demand.
According to market sources, the American Petroleum Institute late on Tuesday reported a massive increase in U.S. oil stockpiles of 11.43 million barrels in the week ended February 20.
Official U.S. oil inventory reports from the Energy Information Administration are due later on Wednesday. ,
Reporting by Stephanie Kelly in London, Katya Golubkova in Tokyo and Jeslyn Lerh in Singapore. Editing by Thomas Derpinghaus, Michael Perry and Mark Potter
This article was first reported by Reuters
