Oil prices increased on Thursday, remaining close to seven-month highs, as investors assessed the potential of U.S.-Iran discussions to prevent a military conflict that could disrupt supply. However, the gains were limited by an increase in U.S. crude inventories. Brent futures were priced at $71.12 per barrel, reflecting an increase of 27 cents, or 0.3%, at 0123. Meanwhile, WTI futures experienced a rise of 23 cents, or 0.4%, reaching $65.65. Brent experienced an increase of 8 cents on Wednesday, whereas WTI saw a decline of 21 cents. On Monday, Brent reached its peak since July 31, while WTI also attained its highest level since July 31. Both contracts have remained close to those levels as Washington has deployed military forces in the Middle East to urge Iran to engage in negotiations aimed at concluding its nuclear and ballistic missile program.

U.S. envoy Steve Witkoff and Jared Kushner are scheduled to engage with an Iranian delegation for a third round of discussions on Thursday in Geneva. “Investors are focusing on whether military conflict will be averted in the U.S.-Iran negotiations,” stated Toshitaka Tazawa. Even if hostilities were to break out, provided the targets were limited and the conflict short-lived, the price of WTI would likely rise temporarily to above $70 a barrel before retreating to the $60-$65 range, he said. An extended conflict has the potential to disrupt supplies from Iran, which ranks as the third-largest crude producer within the Organization of the Petroleum Exporting Countries, alongside other exporters in the Middle East. In his State of the Union address on Tuesday, U.S. President Donald Trump articulated his rationale for a potential military action against Iran, asserting that he would not permit a nation he characterized as the foremost sponsor of terrorism to acquire nuclear capabilities.

Iranian Foreign Minister Abbas Araqchi stated on Tuesday that a deal with the U.S. is “within reach, but only if diplomacy is given priority”. Saudi Arabia is augmenting its oil production and exports as a precautionary measure in anticipation of potential disruptions to supplies from the Middle East resulting from any U.S. military action against Iran, according to sources. OPEC+, comprising members of the Organization of the Petroleum Exporting Countries alongside allies such as Russia, is poised to deliberate on an increase in oil production by 137,000 barrels per day for April, according to sources.

This consideration comes as the group gears up for peak summer demand and anticipates a price surge stemming from the ongoing tensions between the U.S. and OPEC member Iran. U.S. crude inventories increased by 16 million barrels last week, marking the largest rise in three years, according to data released by the Energy Information Administration on Wednesday, which constrained price gains. The increase significantly surpassed the 1.5-million-barrel rise anticipated by analysts.