Oil Prices Hold Near Seven-Month High on US-Iran Tensions
Global oil prices are hovering near their highest levels in roughly seven months, as geopolitical tensions between the United States and Iran inject a fresh risk premium into energy markets.
- Oil near 7-month highs – Brent ~$71–$72, WTI ~$66–$67.
- Prices boosted by US-Iran tensions and a $6–$8 risk premium.
- OPEC+ supply pause and low inventories support the rally.
- Most forecasts see prices falling later in 2026 as supply exceeds demand.
As of February 24, Brent crude is trading in the $71–$72 per barrel range, while West Texas Intermediate (WTI) stands near $66–$67. The rebound marks a sharp recovery from the lows seen in late 2025 and underscores how quickly sentiment can turn when supply risks re-emerge.
Market Status as Talks Resume
Oil benchmarks touched a seven-month intraday high earlier this week as traders positioned ahead of renewed nuclear negotiations in Geneva. Brent traded between $71.41 and $71.60 per barrel, while WTI fluctuated between $66.39 and $66.76.
Over the past month alone, prices have climbed roughly 9%–10%. Year-to-date, the gains are even stronger – WTI is up about 15%, while Brent has surged nearly 20%. Even so, both contracts remain slightly below levels seen a year ago, by roughly 1% to 4%.
The move higher appears driven more by anticipation than by confirmed disruptions. No major physical supply outage has materialized yet, but markets are pricing in the possibility.
Geopolitical Risk Premium Builds
Energy analysts estimate that $6 to $8 per barrel of the current price reflects a geopolitical risk premium tied to US-Iran tensions. President Donald Trump has signaled preference for a diplomatic solution but has also warned of consequences should talks collapse.
If negotiations fail or tensions escalate militarily, some market participants believe Brent could quickly retest the $74–$75 range. For now, traders remain in wait-and-see mode.
OPEC+ and Inventory Support
Beyond geopolitics, supply management and stock levels are also shaping price action.
The OPEC+ alliance has paused planned production increases through the first quarter of 2026 in an effort to prevent oversupply. That decision has helped tighten near-term balances.
At the same time, lower-than-expected stockpiles in OECD economies and recent US inventory drawdowns have provided additional support, reinforcing the perception of a tighter market in the short term.
Forecasts Point to Softer Prices Ahead
Despite the current rally, most major institutions expect oil prices to ease later in 2026 as supply growth begins to outpace demand.
Goldman Sachs forecasts Brent to average $64 in 2026 and WTI around $60, though it recently lifted its fourth-quarter outlook due to low inventories. The U.S. Energy Information Administration projects Brent closer to $58, citing expectations that production will exceed consumption and lead to inventory builds.
Deutsche Bank sees Brent averaging $61.50 next year, while a Reuters survey of economists points to roughly $61 for Brent and $58 for WTI. The most bearish projections, including those from ABN Amro and Capital Economics, place Brent near $55.
Longer term, the EIA expects Brent to slide further to around $53 per barrel in 2027.
Supply Growth Outpaces Demand
Global oil supply is projected to rise by approximately 2.4 million barrels per day in 2026, bringing total output to about 108.6 million barrels per day. In contrast, demand growth is expected to reach just 850,000 barrels per day.
If those projections hold, the market could shift back into surplus territory, gradually eroding the geopolitical premium currently embedded in prices.
For now, however, crude remains supported by diplomacy-driven uncertainty. Until clarity emerges from US-Iran negotiations, volatility is likely to remain elevated, with traders balancing near-term risk against longer-term fundamentals.
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