Oil prices steadied on Tuesday as renewed diplomatic efforts between the United States and Iran tempered recent geopolitical jitters, though traders remain alert to risks that could quickly push crude higher.
US West Texas Intermediate (WTI) crude held around $66 a barrel, after ending Monday's session largely flat. International benchmark Brent crude was trading just under $72 a barrel, levels not seen in several months as markets factor in geopolitical uncertainty.
US President Donald Trump reiterated his preference for a negotiated nuclear agreement with Tehran ahead of scheduled talks this week, portraying diplomacy as the preferred route while warning that failure to strike a deal would have serious consequences. In a social media post, Trump said it would be a "very bad day" for Iran if agreement talks collapse - underscoring the administration's dual approach of negotiating while maintaining pressure.
Trump also pushed back against media reports suggesting the Pentagon is concerned that a prolonged military campaign in Iran could be costly and complex, signalling that Washington remains focused on securing a deal.
Geopolitical risk premiums have been a major factor in oil pricing this year, with markets sensitive to even brief disruptions around the Strait of Hormuz - a strategic chokepoint through which a substantial share of global oil supplies is transported. Recent closures of parts of the strait for Iranian military drills and heightened tensions have contributed to higher tanker rates and reinforced the perception of supply risk.
Analysts note that the market is walking a fine line. While there is optimism that nuclear negotiations scheduled in Geneva later this week could reduce the risk of confrontation, traders continue to price in a geopolitical premium given the possibility that diplomacy falters.
Supply fundamentals also play a role. Despite concerns about conflict, global inventories remain ample, and analysts emphasise that without an actual disruption to flows through critical routes like Hormuz, prices may be capped, even amid heightened rhetoric.
ALSO READ: Stock Market Today: All You Need To Know Before Going Into Trade On Feb. 24
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
