Oil prices stable as US-Iran tensions boost support

• Iran's foreign ministry indicated sufficient consensus to continue diplomatic talks with the U.S., following last week's meeting in Oman after President Trump positioned a naval flotilla in the region
• Trump said Tuesday he is considering sending a second aircraft carrier to the Middle East if talks fail, dampening earlier optimism from productive initial discussions
• U.S. crude inventories rose by 13.4 million barrels in the week ended February 6 according to API data, with official EIA data expected Wednesday showing an estimated 800,000 barrel increase

Oil Prices Stable Amid US-Iran Diplomatic Tensions

Market Performance:

Oil prices held steady on Wednesday, with Brent crude futures up 0.3% to $69.03 per barrel and WTI crude rising 0.4% to $64.19 by 0100 GMT. Prices found support from ongoing geopolitical uncertainty surrounding US-Iran relations.

Key Developments:

Diplomatic talks between the US and Iran resumed last week following President Trump's deployment of a naval flotilla to the region. Iran's foreign ministry indicated Tuesday's discussions showed sufficient consensus to continue negotiations. However, market sentiment remains cautious as Trump confirmed he is considering sending a second aircraft carrier to the Middle East if talks fail, undermining initial optimism from reports of productive discussions.

Market Dynamics:

ANZ analysts noted oil prices initially eased after positive comments from Oman's foreign minister but reversed course on reports of potential additional US military deployment. The market is balancing hopes for peaceful resolution against escalating military posturing.

US Inventory Data:

Traders await Wednesday's Energy Information Administration weekly inventory report. Reuters polling estimates crude inventories rose approximately 800,000 barrels for the week ending February 6, while distillate and gasoline inventories likely declined by 1.3 million and 400,000 barrels respectively. However, American Petroleum Institute figures showed a significantly larger crude inventory build of 13.4 million barrels.

Implications:

The oil market remains range-bound as geopolitical risk premiums provide price support while uncertainty about diplomatic outcomes and rising US crude inventories cap gains. Continued negotiations and inventory data will be key near-term catalysts for price direction.