Oil Prices Rise Amid Heightened Geopolitical Tensions in the Middle East

Global oil benchmarks edged higher on Thursday as traders assessed the risk of escalating conflict between the United States and Iran. Futures for Brent crude traded at $71.06 per barrel, adding 21 cents (0.3%). West Texas Intermediate (WTI) futures rose by 16 cents (0.2%) to $65.58 a barrel.

While both benchmarks ended Wednesday's session nearly flat, Brent had reached its highest level since July 31 earlier in the week. This surge followed Washington's decision to deploy additional military assets to the Middle East, a move analysts see as an effort to increase pressure on Tehran and push for negotiations over its nuclear and missile programs.

The market's primary focus is now on whether diplomatic talks can prevent a military confrontation, according to Toshitaka Tazawa, an analyst at Fujitomi Securities.

Tazawa suggested that even if hostilities were to break out, a limited and short-lived conflict might only temporarily push WTI prices above $70 per barrel before they settled back into a range of $60-$65. However, a prolonged conflict could severely disrupt oil supplies from Iran—the third-largest producer within OPEC—and potentially other nations in the volatile region.

A third round of talks is scheduled for Thursday in Geneva. U.S. Special Envoy Stephen Whitkopf and Jared Kushner are expected to meet with an Iranian delegation in an attempt to de-escalate tensions.