Oil prices remain steady as Iran’s Strait of Hormuz drills heighten supply risk ahead of US nuclear talks, while OPEC+ output decisions and prospects for diplomatic progress temper upside.
Summary:
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Oil prices steady as Iran conducts naval drills near the Strait of Hormuz ahead of US nuclear talks.
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President Donald Trump signals indirect involvement in Geneva discussions, reiterates tough stance.
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Brent holds near $68–69; WTI trades around mid-$63s amid holiday-thinned liquidity in Asia.
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OPEC+ seen preparing for possible output increases from April if supply disruptions persist.
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Base-case outlook from some banks sees eventual Iran and Russia-Ukraine deals weighing on prices toward $60 Brent.
Oil prices were broadly steady in thin trade as investors weighed the risk of supply disruptions after Iran launched naval drills near the Strait of Hormuz just ahead of fresh nuclear talks with the United States.
Brent crude hovered near the upper-$60s per barrel, while US West Texas Intermediate traded in the low-$60s, with price action partly distorted by the US Presidents Day holiday and Lunar New Year closures across much of Asia. Mainland China, Hong Kong, Singapore, South Korea and Taiwan were among markets observing holidays, limiting liquidity.
The focus remains squarely on geopolitics. Iran’s military exercises in the Strait of Hormuz, a critical chokepoint through which a significant share of global oil exports transit, have injected a degree of risk premium into prices. The waterway is a primary export route for major Gulf producers including Saudi Arabia, the United Arab Emirates, Kuwait and Iraq, as well as Iran itself.
President Donald Trump said he would be indirectly involved in the Geneva talks, expressing optimism that Tehran wants an agreement, though recent remarks advocating regime change added a layer of unpredictability to the diplomatic backdrop.
Market participants broadly view the current pricing as reflecting a modest geopolitical premium. Should tensions ease, whether through progress in US-Iran discussions or developments in the Russia-Ukraine conflict, that premium could unwind quickly. Conversely, any escalation or breakdown in negotiations could tighten supply expectations and push prices higher.
Supply dynamics within OPEC+ also remain in focus. Some analysts argue that if disruptions to Russian flows keep Brent in the $65–70 range, the producer alliance may tap spare capacity and increase output from April, particularly as the group positions for peak summer demand. Reports suggest OPEC+ is already leaning toward resuming gradual supply increases.
Longer term, some forecasts assume both a US-Iran accommodation and progress in Russia-Ukraine negotiations by mid-year, which could add barrels back to the market and weigh on Brent toward the low-$60s.
For now, oil sits in a holding pattern — supported by geopolitical risk but capped by expectations of eventual supply normalization.
This article was written by Eamonn Sheridan at investinglive.com.
