Oil prices rose on US-Iran tensions and increased Indian demand
Indian refineries are buying more mainstream oil to replace the Russian supply. Increased risk from tense US-Iran talks and signs of a reduced supply surplus supported by demand from India also boosted oil prices on Wednesday.
Brent crude futures rose 55 cents, or 0.80%, to $69.35 a barrel as of 03:56 GMT. WTI crude rose 57 cents, or 0.89%, to $64.53.
Oil prices remain on an upward trend as US-Iran talks continue, but remain fragile; this is supported by ongoing US sanctions pressure, threats of tariffs linked to Iranian trade, and an increased US military presence in the region, all contributing to a risk premium in the Strait of Hormuz.
Iran said nuclear talks with the US showed sufficient compromise for Tehran to continue on a diplomatic path with Washington.
Trump hinted at the possibility of a second aircraft carrier in the Middle East, raising fears of new military action in the region. Following this, diplomats from Iran and the US met in Oman last week to strengthen diplomacy.
While oil prices initially eased after the Omani Foreign Minister said the US-Iran talks were productive, hopes for a peaceful resolution were dashed after reports that the US might send a second aircraft carrier to the Middle East if talks fail.
On Tuesday, even as Washington and Tehran prepared to resume negotiations aimed at preventing a new conflict, Trump further heightened tensions by saying he was considering sending a second aircraft carrier to the Middle East.
Another factor supporting oil prices was signs of a diminishing supply surplus, as markets absorbed some of the excess barrels seen in the last quarter of 2025.
With mainstream offshore oil returning to normal levels and increased demand in India, oil prices are likely to continue to be supported in the near term.
Indian refineries are avoiding Russian oil purchases to help New Delhi strike a trade deal with Washington, and in return, are increasing oil purchases from the Middle East and West Africa.
US crude oil inventories are estimated to have likely increased last week. Investors are awaiting weekly US oil inventory data from the Energy Information Administration (EIA) on Wednesday.
Analysts estimate that crude oil inventories rose by an average of 800,000 barrels in the week ending February 6, while distillate and gasoline inventories fell by about 1.3 million barrels and 400,000 barrels, respectively.
Market sources, citing American Petroleum Institute (API) figures on Tuesday, said US crude oil inventories rose by 13.4 million barrels in the week ending February 6.
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