Oil markets were broadly steady during Asian trading on Thursday as traders awaited the third set of U.S.-Iran nuclear discussions scheduled for later in the day in Geneva. At 22:42 ET (03:42 GMT), Brent futures for April delivery were trading up 0.3% at $71.03 per barrel, while West Texas Intermediate crude rose 0.2% to $65.55 per barrel.
Diplomatic talks take centre stage
U.S. special envoy Steve Witkoff and Jared Kushner were due to meet Iranian officials in Geneva as Washington pressed for an agreement addressing Tehran's nuclear and ballistic missile programmes. Iranian Foreign Minister Abbas Araqchi indicated that a diplomatic settlement could be achieved if both sides engage constructively. Against that backdrop, U.S. President Donald Trump warned that "bad things" could happen if substantive progress is not made.
Market participants and analysts are treating the Geneva talks as a key near-term influence on prices because Iran is a significant OPEC producer. Any disruption to Iranian crude flows - especially in and around the Strait of Hormuz, through which a substantial share of global oil trade passes - would tend to push prices higher.
Analysts on risk premiums and supply expectations
ING analysts said a diplomatic breakthrough would probably prompt the market to unwind what they estimate is roughly a $10 per barrel risk premium currently embedded in prices. "A constructive resolution would likely prompt the market to gradually unwind as much as a $10/bbl risk premium, which we believe is currently priced in," the analysts wrote.
They added that if talks fail, the upside risk to prices would remain, but the market might delay a full reaction until the potential scale of U.S. measures against Iran is clearer. ING also noted that if de-escalation occurs, softer fundamentals could push the flat price lower - particularly if OPEC+ resumes planned supply increases from April, which the firm expects will be agreed at an upcoming meeting.
Supply-side data: a surprise EIA build
Complicating the picture, U.S. Energy Information Administration weekly figures showed an unexpectedly large increase in commercial crude inventories. For the week ended Feb. 20, commercial crude stocks rose by 16 million barrels, a jump that far exceeded market expectations and marked the biggest weekly build in roughly three years.
Within the refined-product complex, gasoline inventories declined by about 1 million barrels while distillate inventories recorded a modest increase of roughly 250,000 barrels. The EIA data also reported a drop in refinery runs, a factor that contributed to the headline crude build.
Market balance and near-term outlook
With diplomatic developments and fresh inventory data arriving simultaneously, traders are weighing geopolitical risk against supply and demand indicators. Prices remained near recent levels as market participants parsed whether the Geneva discussions will reduce the geopolitical risk premium, whether OPEC+ will proceed with planned supply additions from April, and how the EIA inventory surprise reshapes perceptions of near-term U.S. crude availability.
For now, the combination of a large U.S. stock build and the potential for either de-escalation or escalation in Geneva leaves markets attentive to incoming developments rather than pushing prices decisively in either direction.