WTI Oil stabilizes as US-Iran tensions offset by record US crude inventory build

West Texas Intermediate (WTI) US Oil trades around $65.40 per barrel on Thursday at the time of writing, little changed on the day, after two consecutive days of losses. Crude Oil prices stabilize as markets assess the balance between geopolitical risks in the Middle East and signals of excess supply in the United States (US).

Attention is focused on the third round of nuclear talks between the US and Iran, held in Geneva. US President Donald Trump recently raised the possibility of military action if negotiations fail, while Tehran warned that US military bases in the Middle East could become legitimate targets in the event of escalation. This backdrop maintains a geopolitical risk premium embedded in prices, as traders fear potential disruptions to global supply.

According to Reuters, analysts at ING Group note that the outcome of these talks will be decisive for price action. A constructive agreement could lead to a gradual unwinding of a geopolitical premium estimated at around $10 per barrel currently priced into the market. Conversely, any sign of escalation could revive supply disruption concerns and support prices in the near term.

However, upside potential remains capped by heavier fundamentals. Data released by the Energy Information Administration (EIA) showed that US Crude inventories increased by 15.989 million barrels last week, following a 9.014 million barrel draw the previous week. This marks the largest weekly build since February 2023 and revives concerns about ample supply.

In addition, Saudi Arabia is approaching its highest Crude Oil export levels in nearly three years, while Iran is also accelerating tanker loadings. Meanwhile, the US Department of the Treasury announced that it would authorize companies to apply for licenses to resell Venezuelan Oil to Cuba’s private sector, a move that could increase available supply on the international market.

In this mixed environment, the Oil market swings between geopolitical tensions that could tighten supply and concrete indicators of short-term surplus. Developments from the Washington-Tehran talks could therefore provide clearer direction for WTI in the coming days.