Oil wavered as traders balanced expectations of modest OPEC production hikes in April and bearish US government data against increasing pressure on Iran over its nuclear program.
West Texas Intermediate swung in a roughly $1.50 range, settling down 0.3% at above $65 a barrel. Brent closed above $71 a barrel. Traders have been parsing signals over whether Iran’s concessions over its nuclear ambitions will be enough to achieve a detente with the US.
President Donald Trump’s administration announced Wednesday new sanctions on entities that support Iranian oil and weapons sales. Trump, in his State of the Union address, said Iran is working to reconstitute its nuclear program, adding to speculation that the US is preparing for military action.
Iran has long maintained its nuclear program is for peaceful purposes.
The OPEC member accounts for about 3% of global oil supply, producing roughly 3.3 million barrels per day. Traders are watching for any disruptions, including to a key shipping route, the Strait of Hormuz. Tankers carrying liquefied natural gas also transit through the narrow waterway separating Iran and the Arabian Peninsula.
Meanwhile, the US Energy Information Administration reported on Wednesday that overall crude inventories climbed by nearly 16 million barrels, the biggest gain since February 2023, though a handful of product stockpiles marginally declined. Even as the report caps gains, traders are treating the data with caution, citing atypical weather conditions and a sizable adjustment factor.
Further offsetting Iran related bullish momentum, some OPEC+ delegates said they expect the group will agree to resume modest production increases when it meets this weekend to review policy for April.
The next round of nuclear talks between the US and Iran are set for Thursday in Geneva. The potential military conflict in Iran has lifted prices even with widespread expectations of oversupply in the market.
“So long as we remain in this realm of uncertainty, oil prices are more prone to upside risk on any headlines out of the US Iran talks,” said Samantha Hartke, head of market analysis for the Americas at Vortexa Ltd. “Our view is that a prolonged disruption is unlikely given the onerous effect that will have on Iranian trade flows and revenues,” she added, referring to Hormuz.
US Special Envoy Steve Witkoff told donors in Washington that any nuclear deal with Tehran must be agreed to indefinitely, without any “sunset provisions,” Axios reported, citing sources.
The US has ordered the biggest military build up in the Middle East since the second Gulf War in 2003, including two aircraft carriers. America is adding even more assets to the region, deploying 12 stealth F 22 fighter jets to Israel, according to CNN, which cited a defense official.
Iran, for its part, has been loading oil onto tankers at a rapid pace in recent days, a potential sign of its preparations in case of an attack by the US.
Oil Prices
WTI for April delivery fell 0.3% to settle at $65.42 a barrel in New York.
Brent for April settlement was up 0.1% to settle at $70.85 a barrel.
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