Prices post biggest daily gain since January
Crude oil prices surged more than 4% on Wednesday after Vice President JD Vance said Iran had failed to address US red lines during nuclear talks this week. President Trump, Vance added, reserves the right to use military force if diplomacy fails.
Brent crude settled at $70.35 per barrel, up $2.93 or 4.35%. WTI closed at $65.19, up $2.86 or 4.59%. Both benchmarks posted their highest settlements since January 30. On Thursday, prices extended the rally, with Brent trading at $71.56 and WTI at $66.30.
Geneva talks hit a wall
US envoys Steve Witkoff and Jared Kushner met with Iranian Foreign Minister Abbas Araghchi in Geneva on Tuesday. Araghchi described the session as "constructive," but Vance’s public comments the next day painted a different picture.
Washington wants Iran to give up uranium enrichment on its soil and roll back its missile program. Tehran has rejected both demands. Iran is enriching uranium to 60% purity and insists its missile capabilities are off the table.
Iran had pitched energy and mining deals as a sweetener during the previous round of talks in Oman. That offer appears to have made little difference.
Military option takes shape
Axios reported that a potential US military campaign against Iran would be massive and could last weeks, looking more like a full-scale war than a limited strike. Two carrier groups are already deployed in the region.
Iran’s Revolutionary Guard staged war games near the Strait of Hormuz this week. Roughly one-third of all waterborne crude exports pass through the 21-mile-wide chokepoint, according to Kpler data. Any disruption there would ripple through global oil markets fast.
Where prices go from here
The geopolitical risk premium that faded in early February has come roaring back. Traders who had been focused on the IEA’s 3.7 million bpd surplus forecast are now pricing in the chance that Iranian supply, and possibly Gulf transit flows, could be at risk.
OPEC+ meets March 1 to decide on an April output increase. Rising tensions make that call harder. Loosening supply into a market that could face a military shock is a gamble few producers want to take.