Oil Prices Steady Ahead of US–Iran Nuclear Talks as OPEC+ Weighs Supply Increase

Oil Prices Steady Ahead of US–Iran Nuclear Talks as OPEC+ Weighs Supply Increase

Brent and WTI hold firm while markets assess geopolitical risks and potential production changes

Oil prices were little changed on Monday as traders balanced the potential impact of renewed US–Iran nuclear talks against expectations that OPEC+ may increase supply in the coming months. With several major markets closed for public holidays, trading volumes remained subdued.

Brent crude edged up 0.2% to $67.86 per barrel, while US West Texas Intermediate (WTI) rose 10 cents to $62.99. US markets were closed for Presidents’ Day, contributing to muted activity.

US–Iran Nuclear Talks in Focus

The primary driver of market sentiment this week is the upcoming second round of nuclear negotiations between the United States and Iran in Geneva.

Key developments include:

• Talks aimed at de-escalating tensions over Iran’s nuclear programme
• Mediation efforts involving Oman and discussions with the United Nations nuclear watchdog
• Reports that Iran is seeking an agreement delivering economic benefits, including potential energy, mining and aircraft investment

Investors are closely monitoring whether diplomatic progress could lead to eased sanctions on Iranian oil exports, potentially increasing global supply.

However, uncertainty remains. US officials have reportedly prepared contingency plans for sustained military action if negotiations fail, while Iran’s Revolutionary Guards have warned of retaliation against US military bases in the region if strikes occur.

This geopolitical risk continues to underpin oil prices despite broader supply concerns.

Price Outlook: $60 to $80 Range in Play

Analysts suggest oil prices could move sharply depending on the outcome of the talks.

• Escalating tensions could push Brent crude towards $80 per barrel
• A successful diplomatic breakthrough could see prices retreat towards $60

This wide range highlights the significant geopolitical premium currently embedded in crude prices.

OPEC+ Supply Decision Adds Downside Pressure

While geopolitical tensions provide support, the prospect of increased production from OPEC+ is limiting gains.

The alliance of major oil producers is reportedly leaning towards resuming output increases from April, following a three-month pause. A final decision is expected at its meeting on 1 March.

An increase in supply would:

• Add additional barrels to global markets
• Counterbalance any disruption risk from Middle East tensions
• Potentially cap further upside in oil prices

This dual narrative — geopolitical uncertainty versus rising supply — is keeping prices broadly rangebound.

Chinese Demand and Russian Oil Flows

Meanwhile, global trade flows are also influencing sentiment. China’s imports of Russian oil are expected to rise for a third consecutive month in February, reaching record levels.

This follows a reduction in purchases by India amid US pressure to limit imports. The shift underscores:

• Changing trade patterns within global energy markets
• Continued strong Chinese demand for discounted Russian crude
• The complex interplay between geopolitics and commodity flows

Market Outlook: Volatility Likely to Persist

With geopolitical negotiations underway, OPEC+ production decisions approaching and shifting global demand dynamics, oil markets are likely to remain sensitive to headlines in the days ahead.

For now, crude prices are holding steady as traders await clarity. The outcome of US–Iran talks and OPEC+’s supply stance will be decisive in determining whether oil breaks higher or retreats towards lower support levels.

Investors should expect continued volatility as diplomatic and production developments unfold.

Sources: (Investing.com, Reuters.com)