Oil prices inched higher on Thursday as traders braced for high-stakes nuclear negotiations between Washington and Tehran, even as crude flows from key Middle Eastern producers picked up pace. West Texas Intermediate hovered near $66 a barrel after a softer close in the previous session, while Brent settled below $71.
The market's focus has shifted squarely to Geneva, where a US delegation led by special envoy Steve Witkoff is scheduled to meet Iranian Foreign Minister Abbas Araghchi. The talks come against a backdrop of heightened US military presence in the region, adding another layer of uncertainty to an already tense supply outlook.
Market participants are treating the meeting as a near-term catalyst. Warren Patterson, head of commodities strategy at ING Groep NV, told Bloomberg that crude may currently include a geopolitical risk premium of up to $10 a barrel. Until there is clarity from the talks, he suggested, prices are likely to remain range-bound as traders avoid making large directional bets.
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Crude has been pulled in opposite directions in recent weeks. On one hand, expectations of a global supply surplus later this year have weighed on sentiment. On the other, concerns that tensions involving Iran could disrupt exports from a critical producing region have kept risk appetite intact. That tension is visible in the options market, where positioning continues to favour bullish contracts and implied volatility remains elevated.
US President Donald Trump has said he prefers a diplomatic resolution to the dispute over Iran's nuclear programme, while cautioning that failure to secure an agreement would carry consequences. In the lead-up to the talks, Washington imposed fresh sanctions on more than 30 entities linked to Iranian oil and weapons transactions, intensifying pressure on Tehran.
Meanwhile, physical supply dynamics are shifting. Saudi Arabia is on track to ship its highest volume of crude in nearly three years this month. Iran has also accelerated tanker loadings in recent days, while exports from Iraq, Kuwait and the United Arab Emirates have increased.
Attention will now turn to the upcoming OPEC+ meeting on Sunday, where producers will decide output levels for April. Some delegates anticipate a modest supply increase, though officials acknowledge that escalating US-Iran tensions could complicate the group's calculations.
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