By Konstantinos Chrysikos, Head of Customer Relationship Management at Kudotrade
Oil prices were higher today, rebounding after Tuesday’s decline, as geopolitics continue to affect market direction. Yesterday’s drop came after the latest US-Iran talks in Geneva produced an understanding on the guiding principles of the negotiations, which reduced immediate supply-disruption fears and encouraged profit-taking. However, some risks could remain ahead of the next step in talks and before a deal materializes, keeping sentiment cautious.
The market‘s rebound today was driven by fresh risk signals. Russia-Ukraine talks in Geneva ended, with President Zelenskiy describing the discussions as difficult, reminding markets that the broader geopolitical backdrop remains unstable in oil-producing regions. Separately, Iran and Russia are set to conduct joint naval drills in the Sea of Oman and the northern Indian Ocean on Thursday, adding another layer of regional risk. Additionally, concerns that the US could move forward with military action could keep the market tight.
Traders will also watch US inventory signals, with the API report due later and the EIA Weekly Petroleum Status Report scheduled for Thursday, which can add further volatility to prices.