TOKYO – Oil prices hovered near seven-month highs on Wednesday as the threat of military conflict between the United States and Iran that could disrupt supplies continued to worry investors, despite talks between the parties scheduled for Thursday.
As of 0140 GMT, North Sea Brent futures were trading up 45 cents, or 0.64%, at $71.22 a barrel. WTI futures rose 0.64%, or 42 cents, to $66.05.
On Friday, Brent prices hit their highest since July 31, and on Monday, WTI hit its highest since August 4, but both contracts are hovering around there as the United States deploys military forces in the Middle East to force Iran to negotiate a halt to its nuclear and ballistic missile programs.
A prolonged conflict could disrupt supplies from Iran, the Organization of the Petroleum Exporting Countries’ third-largest oil producer, and other countries in the Middle East’s major producing regions.
U.S. special envoys Steve Witkoff and Jared Kushner are scheduled to meet with the Iranian delegation in Geneva on Thursday for the third round of talks. Iranian Foreign Minister Abbas Arakchi said on Tuesday that a deal with the United States is “within reach, but only if diplomacy is prioritized.”
“The (US) President (Donald) warned that there would be ‘very negative consequences’ without a deal. It remains to be seen whether (Iran’s) concessions meet the US’s ‘zero enrichment’ red line,” IG market analyst Tony Sycamore said in a note. Amid rising tensions, Iran and China are accelerating talks to buy Chinese anti-ship cruise missiles, which could target the US Navy amassed near Iran’s coast, Reuters sources said.
Experts say anti-ship cruise missiles would strengthen Iran’s offensive capabilities and threaten the U.S. Navy. President Trump is scheduled to deliver his traditional State of the Union address to Congress on Tuesday night. Two White House officials said on condition of anonymity that Trump would discuss plans for Iran, but did not provide details.
While geopolitical tensions are supporting prices, the market is also grappling with concerns about a significant increase in inventories as global supply exceeds demand.
The American Petroleum Institute late Tuesday reported a significant increase in U.S. oil stockpiles by 11.43 million barrels for the week ending Feb. 20, according to market sources.
However, gasoline and distillate inventories have declined, officials said, citing API data.
The official U.S. oil inventory report from the Energy Information Administration is expected to be released later Wednesday.
(Reporting by Katia Golubkova in Tokyo; Editing by Christian Schmollinger)
