Geopolitical Risks Support Oil, US Stockpile Rise a Brake
Oil prices remained relatively stable on Wednesday (February 25th), with the market weighing two competing forces: a bearish surge in US crude stockpiles versus a geopolitical risk premium ahead of the US-Iran nuclear talks. At the latest quote, Brent was at $70.77 (-0.22%), while WTI was at $65.56 (-0.11%).
From a fundamental US perspective, the EIA report showed crude oil inventories rose by around 16 million barrels last week—far above market expectations—driven by a decline in refinery utilization and rising imports. Normally, this figure would have put further downward pressure on prices, but the impact was muted as the market is currently more sensitive to supply risks from the Middle East.
The primary focus remains on the US-Iran talks in Geneva, with the market assessing whether diplomacy results in a de-escalation or increases the likelihood of supply disruptions. The most feared risk is an escalation that disrupts oil flows to Iran and the surrounding region, including the strategic Strait of Hormuz.
On the global supply side, the market is also monitoring signals from OPEC+, which is said to be considering a 137,000 bpd production increase for April, as well as Saudi Arabia's readiness to increase output in the event of supply disruptions. This combination of "high US inventories" versus "geopolitical risks + OPEC+ policy" is causing prices to tend to consolidate at high levels until clarity emerges from Geneva and the direction of future production policy.
Source: Newsmaker.id
