Oil Prices Edge Higher Amid Middle East Tensions and Supply Concerns

Oil futures saw modest gains in early trading on Thursday, with Brent crude rising 21 cents (0.3%) to $71.06 per barrel. West Texas Intermediate (WTI) futures increased by 16 cents (0.2%), reaching $65.58 per barrel.

This follows a session on Wednesday where both benchmarks ended nearly flat. However, Brent crude had reached its highest level since July 31 earlier in the week. The price movement comes as the United States deploys additional military assets to the Middle East, a move analysts link to increasing pressure on Iran over its nuclear and missile programs.

Market participants are closely watching the geopolitical situation, according to Toshitaka Tazawa, an analyst at Fujitomi Securities. The primary focus is whether diplomatic talks can prevent a military confrontation between the US and Iran.

Tazawa outlined potential scenarios for oil prices. He suggested that even if hostilities were to break out, a limited and short-term conflict could temporarily push WTI prices above $70 per barrel before settling back into a range of $60-$65. A prolonged conflict, however, poses a significant risk of disrupting oil supplies from Iran—the third-largest producer within OPEC—and potentially other nations in the region.

A third round of talks is scheduled for Thursday in Geneva, where US Special Envoy Stephen Whitkopf and Jared Kushner are expected to meet with an Iranian delegation.