RoydadNaft –  Oil prices fluctuated near their seven-month highs on Wednesday. Investors remain concerned about the possibility of military confrontation between the United States and Iran, which could disrupt oil supply flows; this comes as a new round of negotiations between the two sides is scheduled for tomorrow (Thursday).

According to Roydad Naft, Brent futures contracts rose by 42 cents (0.6%) to $71.19 per barrel (at 07:30 GMT). WTI futures also increased by 41 cents (0.6%) to $66.04.

Brent recorded its highest price since 31 July on Friday, while WTI reached its highest level since 4 August on Monday. Both benchmarks are now fluctuating near these peaks; this follows the United States deploying additional military forces in the Middle East to pressure Iran into negotiations to halt its nuclear programme and ballistic missile activities.

Any prolonged conflict could jeopardise Iran’s oil production — as OPEC’s third-largest producer — as well as supplies from other key Middle Eastern countries.

US President Donald Trump, in his State of the Union address to Congress on Tuesday, briefly mentioned the possibility of military action against Iran, stressing that he would not allow “the world’s biggest sponsor of terrorism” to acquire nuclear weapons.

Analysts at ING wrote in a note: “This uncertainty has led the market to continue pricing in a high level of risk, making it highly sensitive to any new news or development.”

US envoys Steve Witkoff and Jared Kushner are scheduled to meet the Iranian delegation in Geneva tomorrow for the third round of talks.

Iran’s Foreign Minister Abbas Araghchi stated on Tuesday that reaching an agreement with the United States is “within reach”, but only if diplomacy is prioritised.

Tony Sikamore, IG market analyst, wrote in a note: “Trump has warned that without a deal, very bad consequences await. It remains unclear whether Iran’s concessions align with the US condition of ‘zero enrichment’.”

Amid these tensions, reports have emerged of accelerated negotiations between Iran and China for the purchase of Chinese anti-ship cruise missiles. These missiles could threaten US naval forces deployed near Iran’s coasts and, according to experts, significantly enhance Iran’s offensive capabilities.

Despite geopolitical factors supporting prices, the market is simultaneously facing concerns over a substantial increase in oil inventories, as global supply has outpaced demand.

According to an unofficial report from the American Petroleum Institute (API), US crude oil inventories surged by a significant 11.43 million barrels in the week ending 20 February. However, gasoline and distillate inventories declined.

The official US oil inventory report from the Energy Information Administration (EIA) is due to be released today.