TOKYO: Oil prices rose in Asian trade on Thursday as the U.S. and Iran attempted to ease a standoff in talks over Tehran's nuclear programme while both sides heightened military activity in the key oil-producing region.
Brent futures climbed 24 cents, or 0.3% to $70.59 a barrel by 0415 GMT, while U.S. West Texas Intermediate (WTI) crude gained 28 cents, or 0.4%, to trade at $65.47 a barrel.
Both benchmarks settled more than 4% higher on Wednesday, posting their highest settlements since January 30, as traders priced in potential supply disruptions amid concerns of U.S.-Iran conflict.
The main concern for the oil market is that a flare-up in tensions could disrupt shipping in the Strait of Hormuz, ANZ analysts said in a note. About 20% of the world's oil consumption passes through the waterway.
"Tensions between Washington and Tehran remain high, but the prevailing view is that full-scale armed conflict is unlikely, prompting a wait-and-see approach," said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities.
"U.S. President Donald Trump does not want a sharp rise in crude prices, and even if military action occurs, it would likely be limited to short-term air strikes," Kikukawa added.
A little bit of progress was made during Iran talks in Geneva this week but distance remained on some issues, the White House said on Wednesday, adding that Tehran was expected to come back with more details in a couple of weeks.
Iran issued a notice to airmen (NOTAM) that it plans rocket launches in areas across its south on Thursday from 0330 GMT to 1330 GMT, according to the U.S. Federal Aviation Administration website.
At the same time, the U.S. has deployed warships near Iran, with U.S. Vice President JD Vance saying Washington was weighing whether to continue diplomatic engagement with Tehran or pursue "another option".
Satellite images show that Iran has recently built a concrete shield over a new facility at a sensitive military site and covered it in soil, experts say, advancing work at a location reportedly bombed by Israel in 2024.
Iranian state media reported the country had shut down the Strait of Hormuz for a few hours on Tuesday, without making clear whether the waterway had fully reopened.
Meanwhile, two days of peace talks in Geneva between Ukraine and Russia ended on Wednesday without a breakthrough, with Ukrainian President Volodymyr Zelenskiy accusing Moscow of stalling U.S.-mediated efforts to end the four-year-old war.
U.S. crude and gasoline and distillate inventories fell last week, market sources said, citing American Petroleum Institute figures on Wednesday, contrary to expectations in a Reuters poll that crude stocks would rise by 2.1 million barrels in the week to February 13.
Official U.S. oil inventory reports from the Energy Information Administration are due on Thursday. - Reuters
