The market swung between gains and pullbacks as headlines emerged from indirect talks in Geneva between U.S. and Iranian officials. Early in the session, crude climbed more than $1 after reports suggested negotiations had stalled over Washington’s demand that Tehran halt uranium enrichment entirely and hand over its stockpile of highly enriched material.
Prices later pared those gains after Oman’s foreign minister said “significant progress” had been made and that discussions would resume soon, with technical-level talks scheduled in Vienna next week. Traders said developments in the negotiations are likely to remain the dominant driver of price action in the coming sessions.
The market has embedded a geopolitical risk premium amid fears that a breakdown in talks could lead to military escalation in the Middle East. An extended conflict could disrupt exports from Iran — OPEC’s third-largest producer — and potentially affect other regional suppliers.
However, a constructive diplomatic outcome could unwind much of that premium. Analysts estimate that up to $10 per barrel of geopolitical risk could be priced into crude at current levels.
On the supply side, bearish U.S. inventory data capped gains. The U.S. Energy Information Administration reported on Wednesday that crude stocks surged by 16 million barrels last week, a much larger-than-expected build driven by lower refinery utilization and higher imports.
Meanwhile, Saudi Arabia is reportedly preparing a contingency plan to increase production and exports if a U.S. strike on Iran disrupts regional supplies. Separately, OPEC+ is expected to consider raising output by about 137,000 barrels per day in April as the group prepares for peak summer demand while prices remain firm.