LONDON: Brent oil prices were largely stable on Tuesday, as investors braced for nuclear talks between Iran and the U.S., and trilateral U.S.-Ukraine-Russia peace talks, both taking place in Geneva.
Brent crude futures were down 23 cents, or 0.34%, at $68.42 a barrel at 1053 GMT, following a 1.33% gain on Monday. U.S. West Texas Intermediate crude was at $63.57 a barrel, up 68 cents, or 1.08%, but the move included all of Monday’s price action as the contract did not have a settlement that day due to the Presidents Day holiday in the U.S.
Many Asian markets were closed on Tuesday for Lunar New Year holidays, including mainland China, Hong Kong, Taiwan, South Korea and Singapore.
Investors are watching U.S.-Iran relations as any escalation or conflict could lead to Iran closing the Strait of Hormuz, a crucial oil export route, which would severely impact global oil exports.
Russia-Ukraine peace talks are also in focus because any peace resolution could see a lifting of sanctions, bringing Russian oil back to the mainstream market.
Oil prices seen driven by diplomatic signals
“Market sentiment is closely tied to the tone and progress of these negotiations … sustaining a geopolitical risk premium in prices,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
Oil prices are therefore likely to stay volatile, with sharp two-way swings driven by diplomatic signals rather than pure demand-supply fundamentals, Sachdeva added.
The United States and Iran began indirect talks in Geneva on Tuesday over their long-running nuclear dispute, with a senior Iranian official asserting that negotiations hinge on Washington avoiding unrealistic demands as the U.S. masses a battle force in the region.
U.S. envoys Steve Witkoff and Jared Kushner will take part in the negotiations, which are being mediated by Oman, a source briefed on the matter told Reuters, alongside Iranian Foreign Minister Abbas Araqchi.
The talks began after Iran started a military drill on Monday in the Strait of Hormuz, a vital international waterway and oil export route from Gulf Arab states, who have been appealing for diplomacy to end the dispute.
Also in Geneva on Tuesday, Ukrainian and Russian officials are set to meet for a new round of U.S.-brokered peace talks, which the Kremlin said would likely focus on territory, the main sticking point.
Ukrainian attacks on Russian energy infrastructure continue. The Ukrainian military said on Tuesday that it had struck the Ilsky refinery, while a drone attack was also reported at the port of Taman.
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