Global oil benchmarks posted significant gains during Thursday's trading session, recovering from earlier volatility as market participants closely monitored diplomatic developments and awaited key supply decisions. Brent crude futures, the international benchmark, advanced by $1.17, or approximately 1.65%, settling at $72.02 per barrel. Concurrently, U.S. West Texas Intermediate crude increased by 87 cents, or 1.33%, closing at $66.29 per barrel.
Geopolitical Risk Premium in Focus
The primary catalyst for the upward price movement was the ongoing nuclear negotiations between the United States and Iran in Geneva. These talks carry substantial implications for global crude supply, as a potential easing of sanctions could reintroduce significant Iranian barrels to the market. Conversely, a diplomatic breakdown could exacerbate existing tensions and threaten supply disruptions. Market analysts noted that the current geopolitical standoff, compounded by increased U.S. military presence in the Middle East, is adding an estimated risk premium of $3 to $4 per barrel to U.S. crude prices.
Industry experts offered contrasting views on the potential outcome. John Kilduff of Again Capital suggested the diplomatic efforts were "not going so great," while Phil Flynn of Price Futures Group warned that any agreement leading to sanctions relief would create a bearish scenario for oil markets by increasing supply.
Bearish Inventory Data Largely Ignored
The price advance occurred despite the release of a notably bearish weekly inventory report from the U.S. Energy Information Administration. For the week ending February 20, 2026, U.S. commercial crude oil inventories surged by 16.0 million barrels, bringing the total stockpile to 435.8 million barrels. This build far exceeded market expectations. Total commercial petroleum inventories also rose by 11.2 million barrels. A modest bright spot was a draw of 1.0 million barrels in gasoline stocks.
Refinery activity showed signs of slowing. Inputs fell by 416,000 barrels per day to 15.7 million barrels per day. Refiners operated at 88.6% of their operable capacity. Crude imports saw a slight increase, averaging 6.7 million barrels per day. Despite the overwhelmingly bearish inventory figures, the market reaction was muted, as attention had already pivoted to geopolitical and supply-side factors, according to Giovanni Staunovo of UBS.
OPEC+ Decision Looms Large
Market focus is now shifting decisively toward the upcoming meeting of the OPEC+ alliance, scheduled for March 1. The group, which includes members of the Organization of the Petroleum Exporting Countries and allies led by Russia, is expected to deliberate on production policy for April. According to sources familiar with the matter, the coalition will discuss a potential output increase of 137,000 barrels per day, which would conclude a three-month production freeze. This decision is critical as the group balances market stability against rising geopolitical uncertainties and fluctuating demand signals.
European Sanctions Add Another Layer
Further complicating the global supply backdrop are potential new sanctions from Europe. David O'Sullivan, the European Union's sanctions envoy, indicated that the EU is seeking to coordinate with its G7 allies before finalizing a planned ban on maritime services related to Russian seaborne crude exports. Such a move would add another wrinkle to an already complex supply chain and could provide additional support to prices by tightening available shipping and insurance services for Russian oil.
Market at a Crossroads
The oil market currently faces opposing forces. On one side, progress in Geneva talks could swiftly erase the current geopolitical risk premium, pressuring prices lower. On the other, consistent builds in U.S. inventories are raising questions about demand strength and refinery demand, while geopolitical tensions and coordinated supply management by major producers provide a floor. Traders are now awaiting the next signal from the Geneva discussions before turning their full attention to the OPEC+ meeting on March 1, where any adjustment to output plans will be scrutinized for its impact on a market grappling with political uncertainty and supply concerns.
