Oil prices ticked up in Asian trading on Thursday, as escalating geopolitical friction between the United States and Iran kept markets on edge. Investors remain concerned that any military action or attacks on shipping in the region could disrupt crude supplies from the Middle East.
Brent crude futures rose 0.39% to $69.67 per barrel, while U.S. West Texas Intermediate gained 0.45% to $64.92. Both benchmarks settled higher on Wednesday, with geopolitical worries overriding bearish inventory data.
U.S. President Donald Trump indicated after talks with Israeli Prime Minister Benjamin Netanyahu that no definitive agreement had been reached on Iran, though negotiations would continue. Trump has also floated the possibility of deploying a second aircraft carrier to the Middle East should diplomatic efforts fail. The timing and venue for the next round of indirect U.S.-Iran talks remain unclear.
Analysts suggest that a sustained WTI breakout above $65 – $66 would likely require further escalation in the region, while signs of de-escalation could quickly trigger profit-taking and pull prices back toward the $60 – $61 range.
Capping price gains was a substantial build in U.S. crude inventories, which rose by 8.5 million barrels last week — far exceeding analyst expectations of a modest 793 000 barrel increase. However, supportive factors remain in play. Resilient U.S. job growth, with the unemployment rate falling to 4.3%, underpins oil demand expectations. Additionally, global inventory builds have lagged forecasts since the start of the year, and net long positions in crude futures have not yet reached overweight levels. Tighter sanctions on Russian oil and expectations of reduced exports are also providing underlying support.
The sentiment is cautiously bullish, with geopolitical risk premiums re-emerging as the dominant near-term driver. The lack of a clear resolution in U.S.-Iran talks, combined with the threat of further military presence in the region, keeps supply disruption risks squarely in focus. This is reinforced by supportive macro data from the U.S. and tighter supply expectations from Russia. However, the substantial U.S. inventory build serves as a powerful reminder that physical fundamentals remain soft, preventing a more aggressive rally. The market is therefore range-bound, sensitive to headline-driven volatility, and awaiting a decisive catalyst, either an escalation that breaks prices higher or a diplomatic breakthrough that triggers a swift unwind of the current risk premium.
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