Oil Prices Caught Between Middle East Tensions and Growing Stockpiles

published at 02.26.2026

Oil prices remained stable after two days of decline, with West Texas Intermediate (WTI) trading near $65.40 per barrel during European trading hours on Thursday. The market is currently balancing geopolitical tensions and supply concerns. Ongoing negotiations between the United States and Iran are creating uncertainty, especially as traders assess the risk of possible disruptions to global crude supply.

 

Markets are focused on the third round of nuclear negotiations between the United States and Iran taking place in Geneva. President Donald Trump warned that military action could be considered if the talks fail. In response, Iran stated that US military bases in the Middle East would be viewed as legitimate targets if conflict breaks out. This exchange has increased fears of a broader regional confrontation. Analysts believe that the outcome of these discussions will be crucial for crude prices.

Despite political risks, price increases remain limited due to rising supply. According to the Energy Information Administration (EIA), US crude inventories rose by nearly 16 million barrels last week, far exceeding analysts’ expectations of a 1.5 million barrel increase, marking the largest weekly build since February 2023. It is important to note that when inventories rise, it means more oil is stored than expected. Higher stored supply generally puts downward pressure on prices. Recently, refinery activity slowed while imports increased, contributing to the sharp short-term build.

Additional pressure comes from global producers. Saudi Arabia is approaching its highest export levels in almost three years, while Iran is increasing tanker shipments. At the same time, OPEC+ is expected to discuss raising output by 137,000 barrels per day in April, ending a three-month pause in production increases. Eight key members — Saudi Arabia, Russia, the United Arab Emirates, Kazakhstan, Kuwait, Iraq, Algeria, and Oman — will meet on March 1. Reports also suggest that Saudi Arabia has prepared a short-term plan to quickly increase production if a US strike on Iran disrupts regional flows.

 

Earlier this week, Brent reached its highest level since July 31 and WTI hit its highest level since August 4, supported by US military positioning in the Middle East. Iran is the third-largest producer within OPEC, and any prolonged conflict could affect supply from the region. US envoy Steve Witkoff and Jared Kushner are meeting with Iranian officials in Geneva, while Iranian Foreign Minister Abbas Araqchi stated that a deal is possible if diplomacy remains the priority.

 

Meanwhile, the US Treasury announced it will allow companies to apply for licenses to resell Venezuelan crude to Cuba’s private sector, which could help ease fuel shortages on the island. At the same time, tariff uncertainty is creating additional pressure in the markets. A temporary 10% US global tariff recently came into effect following a Supreme Court ruling, and President Trump later suggested the rate could increase to 15%. The US Trade Representative indicated that some countries could face tariffs of 15% or higher, although no further details were provided.

 

Oil prices are currently supported by geopolitical tension but limited by strong supply growth and rising inventories. The direction of US-Iran negotiations will likely be the main short-term driver. A peaceful agreement could reduce the geopolitical premium and push prices lower, while an escalation could trigger strong price increases. Investors may consider closely monitoring developments and using cautious strategies, such as gradual positioning or short-term trading, until clearer signals emerge from both diplomatic progress and global supply data.

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