Oil Prices Steady as Iran Strait of Hormuz Drills Heighten Supply Concerns Ahead of U.S. Nuclear Talks

Oil prices remained steady on Tuesday as investors monitored rising geopolitical tensions following Iran’s naval drills near the Strait of Hormuz, a critical global oil transit route. The military exercises took place just hours before scheduled nuclear talks between Iran and the United States in Geneva, adding uncertainty to the global energy market outlook.

Brent crude futures slipped 0.2% to $68.59 per barrel after gaining 1.3% in the previous session. Meanwhile, U.S. West Texas Intermediate (WTI) crude traded at $63.73 per barrel, up 84 cents or 1.34%. The WTI move reflected Monday’s price activity, as there was no official settlement due to the U.S. Presidents Day holiday.

Market sentiment remains sensitive to developments in the Middle East, particularly around the Strait of Hormuz, which handles a significant portion of global crude oil exports. Iran, along with OPEC members Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq, ships most of its oil through this strategic waterway, largely supplying Asian markets.

U.S. President Donald Trump stated he would be “indirectly” involved in the nuclear negotiations and expressed optimism about a potential agreement, though he previously suggested regime change in Iran could be beneficial. Analysts note that any diplomatic breakthrough could ease geopolitical risk premiums currently embedded in oil prices. Conversely, further escalation may drive crude prices higher.

According to ANZ analysts, oil markets remain unsettled amid broader geopolitical risks, including the Russia-Ukraine conflict. Citi analysts added that if disruptions to Russian supply keep Brent crude between $65 and $70 per barrel, OPEC+ may increase production using spare capacity. The group is reportedly considering resuming output hikes from April to prepare for peak summer demand.

Citi projects that potential diplomatic resolutions involving both Iran and Russia-Ukraine could push Brent prices down to the $60–$62 range later this year, signaling possible volatility ahead for global oil markets.