Oil steadies near 7 month highs as US-Iran tensions keep markets on edge

Oil prices hovered near seven-month highs on Wednesday as investors weighed the risk of military conflict between the United States and Iran ahead of fresh nuclear talks scheduled for Thursday.

Brent crude futures rose 43 cents, or 0.6 percent, to $71.20 a barrel by 0400 GMT, while US West Texas Intermediate gained 38 cents, or 0.6 percent, to $66.01. Brent touched its highest level since July 31 last week, and WTI reached its strongest mark since August 4 on Monday. Both contracts have remained close to those peaks.

Markets have been supported by heightened geopolitical tensions, with Washington deploying additional military forces to the Middle East in a bid to pressure Tehran into curbing its nuclear and ballistic missile programs.

An extended conflict could disrupt supplies from Iran, the third-largest crude producer in the Organization of the Petroleum Exporting Countries, as well as from other producers in the region.

Strategists at ING Group said the uncertainty would keep a significant risk premium built into prices and leave markets sensitive to any new developments.

US envoys Steve Witkoff and Jared Kushner are expected to meet an Iranian delegation for a third round of talks in Geneva on Thursday. Iran’s Foreign Minister Abbas Araghchi said this week that a deal was “within reach” if diplomacy is prioritized.

President Donald Trump has warned of “very bad consequences” if negotiations fail. Analysts say it remains unclear whether any Iranian concessions would meet Washington’s demand for zero uranium enrichment.

Meanwhile, tensions have also been fueled by reports that Iran and China are accelerating discussions over the potential purchase of Chinese anti-ship cruise missiles, which could target US naval forces positioned near Iran’s coast.

Despite geopolitical support, oil markets are also grappling with supply concerns. According to market sources citing data from the American Petroleum Institute, US crude stockpiles jumped by 11.43 million barrels in the week ended February 20. Gasoline and distillate inventories, however, declined.

Official inventory data from the Energy Information Administration is due later Wednesday and could provide further direction for prices.