Oil prices moved higher as traders closely tracked geopolitical developments involving Iran, with military activity near a crucial global shipping route adding to uncertainty ahead of fresh diplomatic talks with the US.
Brent crude hovered above $68 a barrel, while West Texas Intermediate (WTI) traded near $64. The gains come after oil logged its first consecutive weekly decline this year, highlighting the fragile balance between geopolitical risks and demand concerns.
Strait of Hormuz Activity Raises Market Sensitivity
Iran’s Revolutionary Guard has launched naval exercises near the Strait of Hormuz, a critical chokepoint through which roughly one-fifth of global oil supply passes. Any disruption in this corridor could significantly tighten supply, making traders particularly sensitive to military developments in the region.
The drills come just as US and Iranian officials prepare to resume negotiations in Geneva, placing markets on alert for signals that could either escalate tensions or ease supply fears.
Adding to the uncertainty, US President Donald Trump recently reiterated his hardline stance on Iran, stating he would be indirectly involved in the discussions and expressing optimism that Tehran may seek an agreement. His remarks have amplified speculation over potential geopolitical outcomes and their impact on oil flows.
Geopolitical Risks Offset Demand and Supply Balance
Oil has climbed more than 10% so far this year, supported largely by concerns over disruptions in the Middle East, which accounts for roughly a third of global crude production. However, prices have cooled from recent highs as fears of an immediate conflict eased and global demand projections weakened.
Analysts say the outcome of the Geneva talks could play a decisive role in determining oil’s near-term direction. A diplomatic breakthrough could ease supply risks and pressure prices lower, while escalation may trigger further gains.
In addition to Middle East tensions, developments in Eastern Europe remain on traders’ radar. Recent attacks on infrastructure near the Black Sea have raised concerns over Russian supply stability, although expectations of a swift resolution remain low.
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