Oil prices moved slightly higher on Wednesday, staying close to seven-month highs reached earlier in the week. Ongoing U.S.–Iran tensions continued to support the market, offsetting bearish pressure from a sharp rise in U.S. crude inventories and renewed trade uncertainty.
At 13:25 ET (18:25 GMT), Brent crude futures for April delivery gained 0.5% to $71.01 per barrel, while West Texas Intermediate (WTI) crude rose 0.2% to $65.76 per barrel. Both benchmarks had fallen around 1% on Tuesday amid fresh concerns over U.S. trade tariffs.
U.S.–Iran tensions keep risk premium in oil
Oil prices remain supported by a geopolitical risk premium linked to the Middle East. U.S. officials, including special representative Steve Witkoff and presidential adviser Jared Kushner, are scheduled to meet Iranian counterparts in Geneva on Thursday in an effort to revive talks over Iran’s nuclear programme.
Iran’s foreign minister has indicated that a diplomatic agreement is possible if both sides prioritize negotiations. Tehran has signaled flexibility on certain issues in exchange for sanctions relief.
President Donald Trump warned that failure to reach a deal could lead to “very bad consequences,” highlighting the risk that diplomatic efforts could escalate into broader conflict.
According to analysts, oil prices currently include an estimated $7 to $10 per barrel premium due to U.S.–Iran tensions. If negotiations are successful, that premium could quickly fade. However, if talks collapse and tensions intensify—particularly if crude supply routes are targeted—the current premium may prove insufficient.
U.S. crude inventories surge sharply
On the supply side, the American Petroleum Institute (API) reported an 11.4 million-barrel increase in U.S. crude inventories for the week ending February 20. This figure significantly exceeded market expectations for a 1.9 million-barrel rise.
The build represents one of the largest weekly increases in recent months. However, gasoline and distillate stockpiles declined, partially offsetting the bearish crude data. Traders are now awaiting official figures from the Energy Information Administration (EIA) for confirmation.
Analysts noted that a similar build in the EIA data would mark the biggest increase in U.S. crude stocks since February 2024.
Trade policy and OPEC+ in focus
Broader market sentiment has also been influenced by renewed U.S. trade policy uncertainty. President Trump’s 10% global import tariff came into effect on Tuesday, with plans underway to raise the levy to 15%. The move followed a U.S. Supreme Court decision that struck down an earlier tariff programme, prompting the administration to reintroduce duties under different legal authority.
Investors are also closely watching the upcoming meeting of the Organization of Petroleum Exporting Countries and its allies (OPEC+), scheduled for March 1. Given recent strength in oil prices, the group is widely expected to resume supply increases from April.
Despite signs that the current oil market balance may not require additional supply, a decision to boost production could weigh on prices in the coming weeks.
