Global oil markets edged higher in early Friday trading, with Brent crude nearing the $72 per barrel mark as geopolitical uncertainty in the Middle East continued to underpin prices.
Brent futures climbed 0.4 percent to trade at $71.91 per barrel, while U.S. West Texas Intermediate (WTI) crude advanced 0.5 percent to $66.74. The upward adjustment places both benchmarks on course for a weekly gain, supported largely by lingering tensions surrounding diplomatic negotiations between the United States and Iran.
Earlier in the week, oil prices experienced volatility after officials from Washington and Tehran signaled that discussions regarding Iran’s nuclear program would continue. The indirect talks, held in Muscat, Oman, were described by both sides as constructive.
U.S. President Donald Trump characterized the diplomatic engagement as “very good,” suggesting that Iran demonstrated readiness to reach a new understanding. Iranian President Masoud Pezeshkian similarly described the discussions as progress toward easing tensions.
The diplomatic tone helped ease immediate fears of supply disruptions from Iran, a major oil producer strategically located along the Strait of Hormuz — one of the most critical chokepoints for global crude shipments.
Despite the diplomatic optimism, market participants remain cautious. President Trump indicated he is considering deploying a second aircraft carrier strike group to the region should negotiations fail to produce tangible outcomes.
“Either we reach an agreement, or we take very strong measures like before,” Trump said, expressing hope that a second round of discussions would be held next week.
U.S. and Iranian officials initially met in Oman on February 6 and described their exchanges as constructive. That uncertainty — balancing diplomatic progress against the risk of escalation — has preserved a geopolitical risk premium in oil markets.
Demand Signals Temper Further Upside
While geopolitical factors have supported prices, fresh demand data has limited further gains. According to figures released by the U.S. Energy Information Administration (EIA), commercial crude inventories surged by approximately 8.5 million barrels in the week ending February 6 — significantly above expectations for a modest increase. Gasoline stockpiles also rose, raising questions about fuel consumption trends in the world’s largest oil consumer.
Meanwhile, economic data from China — the second-largest oil consumer globally — reinforced concerns about weakening demand momentum. Consumer prices rose just 0.2 percent year-on-year in January, while producer prices declined 1.4 percent, reflecting persistent deflationary pressure.
Analysts noted that subdued household spending and soft industrial activity in China could constrain upside potential for crude prices in the near term.
Further weighing on sentiment, the International Energy Agency (IEA) trimmed its 2026 global oil demand growth forecast by approximately 83,000 barrels per day. The agency now projects demand growth of around 849,000 barrels per day this year, bringing total global consumption to approximately 104.87 million barrels per day.
The IEA also observed that global demand typically declines in January, with consumption falling roughly 2.7 million barrels per day month-on-month during the period.
Despite softer demand indicators, geopolitical fragility continues to provide enough support to keep crude benchmarks on track for weekly gains.
President Trump stated on Thursday that a potential agreement with Iran could materialize within a month, but warned of serious consequences should talks collapse.
“I think within the next month something should happen — and quickly,” he said at the White House. “We have to reach a deal, otherwise it will be very traumatic.”
Although intensified diplomacy has temporarily reduced fears of immediate supply disruptions, traders remain carefully positioned, balancing fragile negotiations against cooling global demand signals.
