Oil Prices Hold Steady Ahead of U.S.–Iran Nuclear TalksGlobal oil prices were largely stable during Thursday’s Asian trading session as investors adopted a cautious stance ahead of the third round of U.S.–Iran nuclear negotiations scheduled later in the day. The talks are widely viewed as a key catalyst that could shape short-term market direction.
As of 22:42 ET (14:42 Vietnam time), April Brent crude futures edged up 0.3% to $71.03 per barrel. Meanwhile, West Texas Intermediate (WTI) crude futures rose 0.2% to $65.55 per barrel. The narrow trading range reflects a market in wait-and-see mode.
The focal point for oil traders is the upcoming meeting in Geneva between U.S. and Iranian officials. U.S. Special Envoy Steve Witkoff and Jared Kushner are expected to meet Iranian representatives as Washington pushes for a deal addressing Tehran’s nuclear and ballistic missile programs.
Iranian Foreign Minister Abbas Araqchi has signaled that a diplomatic solution remains within reach if both sides engage constructively. However, former President Donald Trump warned that “bad things” could happen if meaningful progress is not achieved.
According to analysts at ING, the market is currently pricing in a geopolitical risk premium of up to $10 per barrel due to tensions surrounding Iran.
A constructive resolution could gradually remove this premium, exerting downward pressure on oil prices. Conversely, if negotiations collapse, upside risks would remain. However, markets may delay a full reaction until the scope and nature of potential U.S. action against Iran become clearer.
Iran is one of the larger producers within OPEC, and its crude exports play a meaningful role in global supply. Any disruption to Iranian oil flows would have significant implications for the energy market.
Particularly sensitive is the Strait of Hormuz, a strategic chokepoint through which a substantial portion of global oil trade passes. Escalating tensions that affect shipping in this area could trigger a sharp spike in prices due to supply disruption fears.
On the other hand, if tensions ease, the market may refocus on underlying fundamentals, which currently appear less supportive.
Another key factor under close scrutiny is production policy from OPEC+. ING analysts expect the group to agree this weekend to continue increasing output from April.
If supply increases materialize while U.S.–Iran tensions subside, the market could face additional downward pressure, particularly if global demand fails to accelerate meaningfully. This scenario could pave the way for a short-term correction in oil prices.
Beyond geopolitical concerns, supply-demand data from the United States delivered a major surprise to the market.
According to weekly data from the U.S. Energy Information Administration (EIA), U.S. commercial crude inventories jumped by 16 million barrels in the week ending February 20. This marked the largest weekly increase in roughly three years and far exceeded market expectations.
Crude oil inventories: +16 million barrels
Gasoline inventories: down approximately 1 million barrels
Distillate inventories: up around 250,000 barrels
Refinery activity: declined
The drop in refinery runs contributed to the sharp build in crude inventories, suggesting that input demand from refiners has not been particularly strong. This raises questions about short-term consumption trends in the world’s largest oil-consuming nation.
At present, the oil market is caught between two opposing forces:
Geopolitical risks tied to U.S.–Iran negotiations
Potential disruptions in the Strait of Hormuz
Possible U.S. policy responses
A sharp rise in U.S. crude inventories
Weaker refinery activity
Potential production increases from OPEC+
Moderately soft global demand fundamentals
If negotiations produce a positive outcome, the market may gradually strip out the geopolitical risk premium, shifting attention back to supply-demand fundamentals. In that case, oversupply concerns could dominate sentiment.
Alternatively, a breakdown in talks could lead to renewed supply fears, especially if risks extend to Iranian exports or critical shipping lanes.
For now, oil prices remain in a holding pattern as traders await clearer signals from Geneva. The modest gains in Brent and WTI indicate that investors are reluctant to take large positions before definitive news emerges.
However, this calm may prove temporary. Any significant development—positive or negative—could trigger heightened volatility.
Given Iran’s strategic role in global supply, this round of negotiations may serve as a pivotal turning point for price trends in the second quarter.
Oil prices stand at a critical crossroads, shaped by two major forces: geopolitical uncertainty surrounding U.S.–Iran nuclear talks and a surprisingly large build in U.S. crude inventories.
In the near term, market direction will hinge largely on the outcome of negotiations in Geneva. A diplomatic breakthrough could increase downside pressure as attention returns to softer fundamentals. Conversely, a collapse in talks could reignite supply concerns and push prices higher, particularly if risks spread to strategic routes such as the Strait of Hormuz.
Investors should closely monitor both political developments and supply-demand data, as the interaction between these variables will determine the next trajectory for global oil markets.
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