Oil prices hovered near seven-month highs on Wednesday as investors weighed the risk of escalating United States-Iran tensions ahead of fresh diplomatic talks, even as data pointed to a sharp build in U.S. crude inventories.
By 2:40 pm AEDT (3:40 am GMT), Brent crude futures for May were up 62 cents, or 0.9%, at US$71.20 per barrel. U.S. West Texas Intermediate futures rose 57 cents, or 0.9%, to US$66.20 per barrel.
Both benchmarks have remained elevated as the United States positions military forces in the Middle East in an effort to pressure Iran into negotiations over its nuclear and ballistic missile programmes.
An extended conflict could disrupt exports from Iran, the third-largest crude producer within the Organization of the Petroleum Exporting Countries, as well as supplies from other producers across the strategically vital region.
U.S. envoys Steve Witkoff and Jared Kushner are scheduled to meet an Iranian delegation in Geneva on Thursday for a fresh round of talks aimed at easing tensions.
Iran’s Foreign Minister Abbas Araqchi said on Tuesday that a deal with Washington was “within reach, but only if diplomacy is given priority”.
Against the backdrop of heightened tensions, Reuters reported that Iran and China have accelerated discussions regarding potential purchases of Chinese anti-ship cruise missiles.
Such weapons could target U.S. naval forces that have gathered near Iran’s coastline, according to analysts, potentially raising the stakes in the region.
While geopolitical risks have underpinned crude prices, traders are also monitoring supply-demand fundamentals. Concerns about rising inventories have tempered some of the upward momentum.
According to market sources citing the American Petroleum Institute, U.S. crude stockpiles surged by 11.43 million barrels in the week ended 20 February, far greater than the 1.85 million barrels expected.
