Oil prices edged slightly higher on Wednesday, though they remained near two-week lows. The modest rebound followed a nearly 2% drop in the previous session, investors continued to assess progress in U.S.–Iran nuclear talks while remaining cautious about the prospects of a final agreement.
Reports indicate that Washington and Tehran reached an understanding on key guiding principles in their negotiations, but Iranian officials stressed that this does not mean a deal is imminent. At the same time, Iran temporarily restricted parts of the Strait of Hormuz during military drills — a critical route through which a significant share of global oil supply passes. These developments kept supply concerns alive in the market.
Some analysts believe Iran is unlikely to trigger a major oil shock, given its awareness of the broader economic and political consequences of sharply higher prices. Meanwhile, reports of upcoming joint naval drills between Iran and Russia in the Sea of Oman have added to the region’s geopolitical sensitivity.
In parallel, geopolitical risks extend beyond the Middle East. Ongoing U.S.-brokered peace talks between Ukraine and Russia are also being closely watched, as any shift in that conflict could influence global energy markets. Some political risk consultancies even estimate a notable probability of U.S. military action against Iran in the coming months.
Investors are now awaiting weekly U.S. inventory data for clearer signals on supply trends. Overall, the oil market remains caught between diplomatic optimism and geopolitical uncertainty, resulting in cautious trading and limited but sensitive price movements.
