By: Economy Middle east

Crude oil prices maintained a steady footing during the Wednesday trading session, after experiencing a decline of roughly 2 percent in the previous day’s market activity. This stabilization occurred as market participants analyzed the headway being made in diplomatic negotiations between the United States and Iran, though many traders remained cautious about the actual prospects of reaching a definitive resolution that could potentially mitigate concerns regarding global supply levels. 

In terms of specific figures, futures for Brent crude saw an uptick of 21 cents, or 0.31 percent, bringing the price to $67.63 for each barrel, while the American benchmark, West Texas Intermediate (WTI), saw an increase of 14 cents, or 0.22 percent, to sit at $62.40. These current figures reflect that both primary types of crude are currently trading at levels close to their two-week lows.

Nuclear diplomacy and production

The governments of Iran and the United States arrived at a shared understanding this past Tuesday concerning the central “guiding principles” during their discussions aimed at resolving a long-term dispute over nuclear issues. Despite this step forward, Abbas Araqchi, who serves as the Iranian Foreign Minister, emphasized that this progress should not be interpreted as a sign that a final deal is imminent. Furthermore, the pricing of oil was influenced by accounts from the Russian press stating that output at Kazakhstan’s Tengiz oil field, which is categorized as one of the largest in the entire world, was trending upward following a period of suspension that took place in January. Based on reports from sources cited by Reuters, there are active plans for the Tengiz field to return to its full production capacity by the date of February 23.

Data forecasts and peace talks

The focus of the energy market is expected to shift toward the upcoming weekly inventory statements, starting with the report from the American Petroleum Institute that is set to be released later today. This will be followed on Thursday by the publication from the Energy Information Administration, which functions as the official statistical department of the U.S. Department of Energy. At the same time, representatives from both Ukraine and Russia finished the inaugural day of peace talks held in Geneva on Tuesday, a meeting that was mediated by the United States. During these events, President Donald Trump pressured the leadership in Kyiv to act with speed to reach a formal agreement that would finally end the military conflict that has lasted for four years.

Market volatility and supply surges

The modest recovery on Wednesday followed a volatile Tuesday session where WTI initially surged 1.5 percent on aggressive rhetoric from the U.S. administration before retreating as the “new window of opportunity” in Geneva was announced. Despite the diplomatic optimism, political consultancies like Eurasia Group maintain a 65 percent probability of U.S. military action against Iran by late April if these talks stall, keeping a significant “risk premium” of $2 to $3 embedded in current prices.

On the supply front, the American Petroleum Institute (API) reported a massive 13.4 million barrel build in U.S. crude inventories for the previous week, the sharpest increase since early 2023, which has capped the upside for WTI.

Simultaneously, Kazakhstan’s Energy Ministry confirmed that power distribution systems at the Tengiz field have been safely restored, allowing for a gradual ramp-up from the 20 percent capacity levels seen earlier this month.

While the trilateral peace talks between the U.S., Ukraine, and Russia continue into their second day in Geneva, the International Energy Agency (IEA) has warned of a looming super-glut, projecting that global supply could exceed demand by as much as 3.73 million barrels per day later this year if OPEC+ production remains steady.