Oil prices jumped more than 4% on Wednesday after JD Vance confirmed that Iran had failed to meet key US demands in the nuclear talks, and President Donald Trump insisted that the use of force is still an option if diplomacy fails.
West Texas Intermediate (WTI) crude oil rose $2.86 (4.59%), to close at $65.19 a barrel, while Brent rose $2.93 (4.35%), to close at $70.35 a barrel. The surge reflected market concerns about possible supply disruptions in the Middle East.
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The latest nuclear talks in Geneva were previously reported to have been overpowered by Iran, but Washington insisted there were still unrecognized red lines.
Markets fell early Tuesday following the Iranian report, but Wednesday saw a rebound as military risks resurfaced.
Iran held military exercises in the Strait of Hormuz, a critical route for a third of global oil exports. Markets are concerned that any disruption could limit oil flows, adding to the risk of a price premium.
However, data from energy firm Kpler showed no major disruptions on Tuesday.
The United States has deployed the aircraft carrier USS Abraham Lincoln to the Middle East, and the USS Gerald Ford is en route. Trump has also signaled his readiness to deploy a second carrier if talks fail, adding to pressure on the market.
Overall, oil is currently driven by geopolitical risks, with markets weighing whether US-Iran tensions will disrupt supplies or lead to a larger-scale conflict.
Traders continue to monitor diplomatic developments and military moves to gauge the near-term direction of oil prices.
