Oil climbs as US-Iran tensions keep supply risks in focus

A view shows an oil pump jack outside Almetyevsk, in the Republic of Tatarstan, Russia July 14, 2025. REUTERS/Stringer · Reuters

By Yuka Obayashi

Thu, 26 February 2026 at 10:57 am GMT+9 2 min read

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By Yuka Obayashi

TOKYO, Feb 26 (Reuters) - Oil prices climbed on Thursday, hovering near seven-month highs, as investors gauged whether U.S.-Iran talks could avert a military conflict that risks supply disruptions, though ‌gains were capped by a build in U.S. crude inventories.

Brent futures were trading at $71.12 per barrel, ‌up 27 cents, or 0.3%, at 0123 GMT. WTI futures rose 23 cents, or 0.4%, to $65.65.

Brent gained 8 cents on Wednesday, while ​WTI fell 21 cents.

On Monday, Brent rose to its highest since July 31 and WTI to its highest since July 31. Both contracts have held near those levels as Washington has positioned military forces in the Middle East to press Iran to negotiate an end to its nuclear and ballistic missile programme.

U.S. envoy Steve Witkoff and Jared ‌Kushner are due to meet an ⁠Iranian delegation for a third round of talks on Thursday in Geneva.

“Investors are focusing on whether military conflict will be averted in the U.S.-Iran negotiations,” said Toshitaka Tazawa, an ⁠analyst at Fujitomi Securities.

Even if hostilities were to break out, provided the targets were limited and the conflict short-lived, WTI would likely rise temporarily to above $70 a barrel before retreating to the $60–$65 range, he said.

An extended conflict could disrupt ​supplies from ​Iran, the third-biggest crude producer in the Organization of ​the Petroleum Exporting Countries, and other Middle East ‌exporters.

U.S. President Donald Trump briefly laid out his case for a possible attack on Iran in his State of the Union speech on Tuesday, saying he would not allow a country he described as the world’s biggest sponsor of terrorism to have a nuclear weapon.

Iranian Foreign Minister Abbas Araqchi said on Tuesday that a deal with the U.S. was “within reach, but only if diplomacy is given priority”.

Saudi Arabia is increasing its oil production ‌and exports as part of a contingency plan in case ​any U.S. strike on Iran disrupts supplies from the Middle East, ​two sources familiar with the plan said on ​Wednesday.

OPEC+, which includes members of the Organization of the Petroleum Exporting Countries and allies ‌including Russia, is likely to consider raising its ​oil output by 137,000 barrels ​per day for April, three sources with knowledge of OPEC+ thinking said as the group prepares for peak summer demand and a price boost from the tensions between the U.S. and OPEC member ​Iran.

Limiting the gains in prices, U.S. ‌crude inventories rose by 16 million barrels last week, the most in three years, data from ​the Energy Information Administration showed on Wednesday. That far exceeded the 1.5-million-barrel rise that analysts ​had forecast in a Reuters poll. [EIA/S]

(Reporting by Yuka Obayashi)

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