Oil prices rose slightly on Thursday as investors assessed whether talks between the US and Iran could avert a military conflict that could disrupt supplies, although gains were limited by an increase in US oil inventories, UNN reports, citing Reuters.
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Brent crude futures traded at $71.04 a barrel, up 19 cents, or 0.3%, by 4:15 GMT (6:15 Kyiv time). WTI crude futures rose 15 cents, or 0.2%, to $65.57 a barrel.
While Brent and WTI prices were little changed on Wednesday, Brent rose to its highest level since July 31 on Monday as Washington deployed military forces in the Middle East to pressure Iran into agreeing to halt its nuclear and ballistic missile program.
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"Investors are focused on whether a military conflict can be averted in the US-Iran talks," said Toshitaka Tazawa, an analyst at Fujitomi Securities.
Even if hostilities begin, provided that the targets are limited and the conflict is short-lived, the price of WTI crude will likely temporarily rise above $70 a barrel before falling to the $60-65 range, he said.
A protracted conflict could disrupt supplies from Iran, the third-largest oil producer in the Organization of the Petroleum Exporting Countries, and other Middle Eastern exporters.
US envoy Steve Witkoff and Jared Kushner will meet with an Iranian delegation in Geneva on Thursday for a third round of talks.
"The outcome of today's US-Iran nuclear talks will be key to guiding oil prices… A constructive resolution of the conflict is likely to prompt the market to gradually reduce the risk premium of up to $10 a barrel, which we believe is already priced in," ING analysts said in a note on Thursday.
"If the talks fail, there remains an upside risk, but the market may hold off on a full-scale reaction until the extent of potential US actions against Iran becomes clearer," they noted.
US President Donald Trump briefly outlined his position on a possible attack on Iran in his State of the Union address on Tuesday, saying he would not allow the country, which he called the world's largest sponsor of terrorism, to have nuclear weapons.
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Iranian Foreign Minister Abbas Araqchi said on Tuesday that a deal with the US was "achievable, but only if diplomacy is prioritized."
Saudi Arabia is increasing oil production and exports as part of a contingency plan in case a US strike on Iran disrupts supplies from the Middle East, two sources familiar with the plan said on Wednesday.
OPEC+, which includes members of the Organization of the Petroleum Exporting Countries and its allies, including Russia, is likely to consider increasing oil production by 137,000 barrels per day in April, three sources familiar with OPEC+ plans said, as the group prepares for peak summer demand and the US. OPEC member.
Limiting oil price gains, US crude inventories rose by 16 million barrels last week, the largest increase in three years, Energy Information Administration data showed on Wednesday, significantly exceeding the 1.5 million barrel increase forecast in a Reuters poll.