Crude oil prices rose on early Thursday as an impasse in diplomatic negotiations coincided with heightened military posturing, forcing traders to recalculate the geopolitical risk embedded in global energy markets.
Diplomatic Deadlock And Escalation
The rally follows a critical stalemate in Geneva, where indirect nuclear talks between Washington and Tehran have stalled.
White House Press Secretary Karoline Leavitt confirmed that while progress was made, the two nations continue to stand “far apart” on several issues. The administration warned that Iran would be “very wise to make a deal” as the U.S. continues to increase its air and naval assets in the Middle East.
Tensions were further inflamed by a post from President Donald Trump suggesting that the Diego Garcia airbase might be utilized to “eradicate a potential attack” if a deal is not reached.
Iran responded with defiance; Supreme Leader Ayatollah Ali Khamenei warned of weapons capable of sending U.S. aircraft carriers to the “bottom of the sea,” while Tehran issued notices for planned rocket launches.
Market ‘Risk Premium’ And Technicals
Oil benchmarks responded sharply to the deteriorating headlines, with Brent Crude rising 1.49% to $71.40 and WTI Crude reaching $66.02, as of the publication of this article.
Despite the aggressive rhetoric, market analyst Matt Simpson noted that “price action trumps the narrative,” suggesting that traders are currently pricing a “risk premium” rather than an imminent war.
Strategic Outlook For Crude
The near-term trajectory for oil remains tethered to these “pressure tactics.” While a “limited strike” remains a wildcard, the technical structure for WTI is considered “constructive” as it holds above the $62 support zone.
However, experts warn that any disruption to the Strait of Hormuz—a primary artery for global supply—could cause volatility to expand far beyond current levels.
West Texas Intermediate crude prices – as tracked by the United States Oil Fund (NYSE:USO) – are up 15.14% year-to-date.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Shutterstock
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