Oil prices whipsawed on Wednesday, closing sharply higher after US Vice President JD Vance warned that Iran had failed to address Washington’s core demands at nuclear talks in Geneva, raising the prospect of military action that analysts say could drive Brent crude above 90 US dollars per barrel within months.
Brent crude settled 4.35 percent higher at 70.35 US dollars per barrel, while US West Texas Intermediate (WTI) crude closed up 4.59 percent at 65.19 US dollars per barrel, recovering sharply after both benchmarks fell nearly 2 percent on Tuesday when Iran’s foreign minister initially described talks as productive.
The session was dominated by geopolitical whiplash. US envoys Steve Witkoff and Jared Kushner met their Iranian counterparts in Geneva for a second round of nuclear negotiations, with Iranian Foreign Minister Abbas Araghchi telling reporters the discussions yielded a general understanding on guiding principles. Markets initially sold off on those comments, interpreting them as a step toward a deal that could eventually bring additional Iranian barrels back into global supply.
But Vance contradicted that reading hours later, telling Fox News that Iran had not yet acknowledged or worked through the president’s red lines. “In some ways it went well, they agreed to meet afterwards. But in other ways it is very clear that the president has set some red lines that the Iranians are not yet willing to actually acknowledge and work through,” he said.
President Donald Trump has deployed the USS Abraham Lincoln aircraft carrier to the Middle East, and the USS Gerald Ford is en route. Trump said he dispatched the second carrier in case negotiations fail. “If we don’t have a deal, we’ll need it,” he told reporters. Political consultancy Eurasia Group placed the probability of US military strikes against Iran by end of April at 65 percent.
About 20 percent of the world’s oil, roughly 20 million barrels per day, passes through the Strait of Hormuz, according to US Energy Information Administration (EIA) data. Iran’s Revolutionary Guard conducted live-fire exercises in the strait on Tuesday, temporarily shutting sections of the waterway in what analysts described as a deliberate signal timed to coincide with the opening of the Geneva talks.
Ukraine-Russia ceasefire talks in Geneva collapsed after only two hours on Wednesday, with Ukrainian President Volodymyr Zelenskyy accusing Russia of deliberately seeking to delay progress. Russia’s chief negotiator Vladimir Medinsky described the session as difficult but business-like and said a new round of talks would be held soon. The breakdown added a separate geopolitical risk premium to energy markets already stretched by the Iran standoff.
If Geneva negotiations fall apart entirely, energy analysts have modelled scenarios where Brent crude surges 20 to 25 US dollars per barrel from current levels, a move that would ripple through transport costs, food prices and inflation targets in both developed and emerging markets.
Investors awaited the American Petroleum Institute (API) inventory report Wednesday evening, with the EIA’s weekly stockpile data due Thursday morning. A Reuters poll of analysts estimated US crude oil inventories likely rose last week while distillate and gasoline stocks fell, data that could complicate any near-term price direction if supply builds counter to the prevailing risk premium.
