LONDON: Oil prices rose about 3% on Friday as traders remained on alert for potential supply disruptions after the United States and Iran extended nuclear talks.
Brent crude futures advanced by $2.13, or 3%, to $72.88 a barrel by 1328 GMT while U.S. West Texas Intermediate crude was up $2.31, or 3.5%, at $67.52.
The Brent and WTI benchmarks were trading at their highest since July and August respectively and poised to register weekly gains of 1.6% and 1.7%.
“Uncertainty prevails, fear is pushing prices higher today,” said Tamas Varga, an oil analyst at brokerage PVM. “It is completely driven by the outcome of the Iranian nuclear talks and possible military action the U.S. might take against Iran.”
The United States and Iran held indirect talks in Geneva on Thursday after U.S. President Donald Trump ordered a military buildup in the region.
Oil prices gained more than a dollar a barrel during the talks on media reports indicating that discussions had stalled over U.S. insistence on zero enrichment of uranium by Iran. However, prices eased after the Omani mediator said the two sides had made progress in the talks.
They plan to resume negotiations with technical-level discussions scheduled next week in Vienna, Omani Foreign Minister Sayyid Badr Albusaidi said on X.
“We think the latest round of talks offers some hope on chances of a peaceful resolution, but military strikes are in no way out of the equation,” said DBS analyst Suvro Sarkar.
Trump said on February 19 that Iran must make a deal over its nuclear programme within 10 to 15 days or “really bad things” will happen.
Geopolitical risk premiums of $8 to $10 a barrel have built in oil prices on fears that a conflict will disrupt Middle East supply through the Strait of Hormuz, where about 20% of global oil supply passes, Sarkar said.
To cushion the impact from a possible strike, Saudi Arabia is increasing oil production and exports, two sources familiar with the plans told Reuters.
Producer group OPEC+, meanwhile, is likely to consider raising oil output by 137,000 barrels per day for April at its March 1 meeting, sources said, after suspending production increases in the first quarter.
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