BY COMFORT OGBONNA
Oil prices rose modestly on Friday but remained on track for a weekly decline as diplomatic efforts between the United States and Iran eased immediate fears of supply disruptions, while traders also looked ahead to a key weekend production decision from OPEC+.
Brent crude futures climbed 36 cents, or 0.51%, to $71.11 a barrel by early morning trading. U.S. West Texas Intermediate crude gained 38 cents, or 0.58%, to $65.59 per barrel. Despite the rebound, both benchmarks were poised to post losses for the week, with Brent down about 1% and WTI set to fall roughly 1.3%, reversing part of the previous week’s gains.
Market participants appeared cautious heading into the weekend, balancing geopolitical tensions against the possibility of increased supply. June Goh, a senior analyst at Sparta Commodities, said traders were largely in “wait-and-see mode” as tensions surrounding Iran mounted on one side, while a potential production increase from OPEC+ at its Sunday meeting weighed on sentiment.
The United States and Iran held indirect talks in Geneva on Thursday aimed at addressing their long-running nuclear dispute and averting further escalation. The diplomatic push follows a military build-up in the region ordered by U.S. President Donald Trump, heightening concerns that miscalculation could spark conflict.
During the negotiations, oil prices briefly surged more than $1 per barrel after media reports suggested the talks had stalled. Reports indicated disagreement over Washington’s demand that Iran halt all uranium enrichment and transfer its stockpile of 60% enriched uranium abroad. However, prices later eased after mediation efforts signaled incremental progress.
Oman has played a central role in facilitating dialogue. Following the Geneva meetings, Omani Foreign Minister Sayyid Badr Albusaidi said both sides had made headway and would resume discussions at the technical level next week in Vienna. The announcement tempered fears of an imminent breakdown in diplomacy.
Analysts remain divided over the likelihood of military action. DBS analyst Suvro Sarkar said the latest talks offer cautious optimism for a peaceful outcome but warned that the possibility of strikes cannot be ruled out given the history of tensions. Sparta Commodities’ Goh added that while rhetoric from both sides suggested limited willingness to compromise, any potential U.S. military action would likely be contained rather than broad-based.
Geopolitical risk premiums have already been built into prices, with analysts estimating that $8 to $10 per barrel reflects fears of disruption to Middle Eastern supply routes. Particular attention is focused on the Strait of Hormuz, a strategic chokepoint through which roughly 20% of global oil supply flows. Any interruption there could send prices sharply higher.
To mitigate potential fallout, Saudi Arabia is reportedly increasing oil production and exports as part of a contingency plan, according to sources familiar with the matter. Such preparations underscore the sensitivity of global energy markets to developments in the Gulf region.
Meanwhile, OPEC+ — the alliance of the Organization of the Petroleum Exporting Countries and allied producers including Russia — is expected to consider raising output by about 137,000 barrels per day for April at its March 1 meeting. The group had previously paused planned production increases during the first quarter, citing market stability concerns.
If OPEC+ proceeds with a supply hike while diplomatic talks with Iran continue, additional barrels could weigh on prices in the near term. Conversely, any renewed escalation in the Middle East could quickly reverse losses and reignite volatility.
For now, oil markets remain caught between competing forces: fragile diplomatic progress that reduces immediate supply risks and the prospect of higher output that could soften balances. Traders are bracing for potential price swings as both geopolitical and policy decisions unfold in the days ahead.
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