Oil Prices Steady Near Two-Week Lows as U.S.–Iran Talks and Geopolitics Keep Markets on Edge

BY COMFORT OGBONNA

Oil prices stabilized in Asian trading on Wednesday after tumbling roughly 2% in the previous session, as investors weighed diplomatic developments between the United States and Iran while remaining wary about whether a lasting agreement could materialize and significantly alter global supply dynamics.

Brent crude futures edged up 15 cents, or 0.22%, to $67.57 per barrel by 0737 GMT, while U.S. West Texas Intermediate crude gained 12 cents, or 0.19%, to $62.45 per barrel. Despite the modest rebound, both benchmarks hovered near two-week lows, underscoring persistent uncertainty in energy markets.

The cautious tone followed fresh signals of engagement between Washington and Tehran. Iran and the United States reportedly reached an understanding on key “guiding principles” during talks aimed at resolving their longstanding nuclear dispute. However, Iranian Foreign Minister Abbas Araqchi stressed that such progress does not indicate a comprehensive agreement is imminent, tempering expectations of any near-term breakthrough that could pave the way for increased Iranian oil exports.

Analysts said that while prices could see a short-term technical bounce after recent declines, structural uncertainties remain firmly in place. Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet, noted that although crude appears poised for a rebound, a finalized agreement remains distant and markets are cautious about the durability of diplomatic momentum.

Geopolitical tensions continue to cast a long shadow over the oil market. Iran and Russia are set to conduct joint naval drills in the Sea of Oman and the northern Indian Ocean, according to Iran’s semi-official Fars news agency. The exercises come just days after Iran’s Revolutionary Guards carried out military drills in the Strait of Hormuz, a critical chokepoint through which a significant share of the world’s oil supply passes. Any escalation in the region has the potential to disrupt shipments and inject additional volatility into prices.

Adding to concerns, political consultancy Eurasia Group said in a note to clients that it sees a 65% probability of U.S. military strikes against Iran by the end of April. Such a scenario, while not the base case, highlights the fragile security backdrop and the possibility of sharp price swings if tensions intensify.

Market participants are also closely monitoring upcoming U.S. inventory data for further clues about supply-demand balances. The American Petroleum Institute is scheduled to release its weekly report later Wednesday, followed by official figures from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, on Thursday.

Analysts surveyed expect U.S. crude oil stockpiles to have risen by approximately 2.3 million barrels in the week to February 13, suggesting continued supply resilience. At the same time, gasoline inventories are projected to have fallen by about 200,000 barrels, while distillate stockpiles including diesel and heating oil  likely declined by around 1.6 million barrels. A drawdown in refined products could signal steady consumer demand, even as crude inventories build.

Beyond the Middle East, diplomatic efforts to resolve the war in Ukraine are also influencing sentiment. Negotiators from Ukraine and Russia concluded the first day of U.S.-brokered peace talks in Geneva, raising hopes for progress in ending the four-year conflict. President Donald Trump urged Kyiv to move swiftly toward an agreement, emphasizing the importance of stabilizing the region.

Energy traders remain alert to any shifts in this geopolitical axis, as changes in the Russia-Ukraine dynamic could alter global energy flows and affect sanctions regimes. Any breakthrough — or breakdown — in negotiations could introduce a fresh risk premium into oil prices.

For now, crude markets are caught between competing forces: the possibility of increased Iranian supply if diplomacy advances, persistent geopolitical flashpoints that threaten disruption, and mixed signals from U.S. inventory data. The result is a market that is steady on the surface but highly sensitive to headlines, with traders prepared to react swiftly to any meaningful change in the global energy landscape.