Oil markets steadied on Friday as traders digested news that the United States and Iran will continue indirect nuclear negotiations next week, even as geopolitical tensions linger over a possible military confrontation in the Middle East. Brent crude futures traded just under $71 a barrel, while US benchmark West Texas Intermediate hovered above $65, little changed from the previous session.
The latest round of talks in Geneva was described by Iranian officials as constructive, though sources familiar with the US position suggested American negotiators left disappointed. Both sides have agreed to hold follow-up meetings in Vienna after consulting with their respective capitals.
Diplomacy Tempering Geopolitical Risk
Despite extended negotiations, oil prices remain elevated year-to-date amid the risk that diplomatic efforts could still fail, leaving the door open for military escalation. Continued US deployment of forces across the Middle East has underscored that risk, keeping a geopolitical "premium" in prices as markets weigh supply disruption fears.
Investors are also awaiting a scheduled OPEC+ meeting this weekend, where producers are expected to weigh fresh supply measures that could further influence price direction.
Conflict Risk Keeps Markets on Alert
Broader uncertainty persists over Iran's nuclear programme and Washington's demands, which include curbing enrichment activities that Tehran insists are peaceful. The US military build-up - its largest in the region since the early 2000s - coupled with Iran's heightened oil exports and storage levels, reflects broader anxieties about potential disruptions, especially around the Strait of Hormuz, a key conduit for global crude shipments.
With oil fundamentals still seen as structurally loose due to ample global supply, any breakthrough in negotiations could quickly remove the geopolitical risk component priced into futures. But for now, markets remain cautious, watching both diplomatic signals and policy moves out of Riyadh, Tehran, and Washington.
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